# Systemic Risk

*Risk & Portfolio — Finicade finance glossary*

Systemic risk is the danger that one institution failure cascades into collapse of the wider system, through exposures, fire sales and lost confidence.

Systemic risk is the danger that one institution's failure cascades into the collapse of the wider financial system, through direct exposures, fire sales and lost confidence. It's distinct from systematic risk, which merely means undiversifiable market risk. The policy response since 2008 — capital surcharges for globally important banks, central clearing, resolution planning — is aimed squarely at making individual failure survivable for everyone else.

**Also known as:** systemic, contagion risk, too big to fail

**Related terms:** [Clearing House](https://finicade.com/glossary/clearing-house), [Basel Rules](https://finicade.com/glossary/basel-rules), [Counterparty Risk](https://finicade.com/glossary/counterparty-risk), [Liquidity Risk](https://finicade.com/glossary/liquidity-risk), [Correlation](https://finicade.com/glossary/correlation)

Source: https://finicade.com/glossary/systemic-risk