For example, this sort of risk has been central to the repricing of many structured-credit products during the turmoil of the past few months, when investors have struggled to understand how potential losses in subprime mortgages might filter through the layers of complexity that such products entail.
The second type of risk that I consider central to the understanding of financial stability is what I call macroeconomic risk – that is, an increase in the probability that a financial disruption will cause significant deterioration in the real economy.