Author: David Schwartz J.D. CPA
The financial crisis made clear that interconnectedness and complexity have the potential to magnify localized shocks and amplify and transmit them to the greater financial system. Understanding the risks posed by our ever more interconnected global financial system is crucial to managing those risks. To that end, DTCC has published a whitepaper providing an overview of the subject, surveying a selection of interconnectedness studies conducted thus far, and highlighting regulatory measures designed to address interconnectedness risks. Among other things, DTCC concludes that “firms must do more than monitor and mitigate these risks – they also need to focus on building resiliency so they can detect potential systemic shocks before they strike or recover from them as quickly as possible.”