We may fall into a vicious circle in which the imposition of one regulation itself gives birth to another and so ad infinitum. 3. Missed risk factors  Thirdly, the difficulty of identifying newly emerging imbalances in a timely manner is another stumbling block on the road to effective surveillance.
The complex network interlinking financial institutions is effective in diversifying the risks during a business expansion phase. In a critical financial situation, however, the same network functions as channel of risk contagion.