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Pages on this website that contain links to this reference include SystemicRiskReferences5

Summary (partial) "Here, I present and discuss a “10-by-10-by-10” network-based approach to monitoring systemic financial risk. Under this approach, a regulator would analyze the exposures of a core group of systemically important financial firms to a list of stressful scenarios, say 10 in number. For each scenario, about 10 such designated firms would report their gains or losses. Each reporting firm would also provide the identities of the 10, say, counterparties with whom the gain or loss for that scenario is the greatest in magnitude relative to all counterparties. The gains or losses with each of those 10 counterparties would also be reported, scenario by scenario."

Additional Nematrian Commentary The aim of the approach set out in this paper is to provide a relatively straightforward way of monitoring interconnectedness in the financial system. It does this by focusing on a small number of the most important elements of interconnectivity. This should be easier to derive than a full map of the financial system. The approach specified in the paper concentrates on direct interconnections, and therefore may not be so effective at capturing indirect ways in which contagion could spread through the financial system.

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