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Systemic Risk


Financial Systemic Risk: A Network Approach



The Financial Systemic Risk project brought together 5 internationally known researchers to address foundational issues that must be resolved before we can fully understand what makes a resilient financial network.

  • How can stability be measured and managed?
  • How should banks be regulated, and what sticks and carrots should be used to influence their behaviour?
  • How do changes in the system structure, for example, centralised clearing or major bank mergers, impact stability?
  • How does failure in one channel or market spill over into other channels?

Can the system design be made more resilient by adopting measures in analogy with other designed systems, such as redundancy or the introduction of "traffic calming'' devices like speed bumps, speed limits and guard rails?

The project broke this diverse collection of issues into 5 areas of focus:

  • Phase structure of hypothetical financial systems
  • The current network
  • Regulatory regime change
  • Regulatory intervention
  • Bank formation.




McMaster University

Project Lead

Prof. Thomas Hurd

publications and links



Related Publications


The Construction and Properties of Assortative Configuration Graphs >

Portfolio Choice in Markets with Contagion >

Bounding Wrong-Way Risk in CVA Calculation >

Percolation in Multiplex Networks with Overlap >

A Simple Generative Model of Collective Online Behaviour >

A Rolling Optimization Model of the UK Gas Market >

Multilayer Networks >

Dynamical Systems on Networks: A Tutorial >

Competition-Induced Criticality in a Model of Meme Popularity >

Emergency Liquidity Facilities, Signaling and Funding Costs >

Learning and Optimal Delay in Bargaining over Sovereign Debt Restructuring >

Macroprudential Policy: A Review >

Restructuring Failure and Optimal Capital Structure >

Why are Banks Highly Interconnected? >

A Framework for Analyzing Contagion in Banking Networks >

Illiquidity and Insolvency: a Double Cascade Model of Financial Crises >

Inflation and Speculation in a Dynamic Macroeconomic Model >

Destabilizing a Stable Crisis: Employment Persistence and Government Intervention in Macroeconomics >

How Likely is Contagion in Financial Networks? >

Contagion in Financial Networks >

Stress Scenario Selection by Empirical Likelihood >

Are the Fed's Stress Test Results Predictable? >

Hidden Illiquidity With Multiple Central Counterparties >

Design of Risk Weights >

Process Systems Engineering as a Modeling Paradigm for Analyzing Systemic Risk in Financial Networks >

Stress Tests to Promote Financial Stability: Assessing Progress and Looking to the Future >

Contagion! Systemic Risk in Financial Networks >

Lead Researcher

 Lead Researcher

Thomas Hurd

Thomas Hurd is a Professor of Mathematics at the McMaster University. His original research was in mathematical physics, but for the last 15 years he has focused on mathematical finance. Hurd is the founder of Phiman, the financial mathematics laboratory at McMaster, and the co-founder and current Director of M-Phimac, a course-based M.Sc. program in financial mathematics.  Hurd is also the Chair of the Quantitative Finance Seminar Series at the Fields Institute in Toronto. Hurd holds a B.Sc. from Queen’s University and a Ph.D. from Oxford.