systemic – risk can build up largely unchecked if authorities lack a broad perspective, and that the consequences of a crisis originating in financial markets may extend far beyond the fortunes of individual investors.
The authorities in charge of financial regulation and supervision need to be able to monitor the potential sources of risks, to anticipate the build-up of systemic risk, and to deploy instruments to prevent it from materialising when possible; or, failing that, to mitigate their fallout.