Systemic Risk Revisited: A Working Definition and Diagnostic Framework for Risk Analysis

ABSTRACT

Systemic risk has gained increasing attention across disaster risk reduction, climate governance, finance, infrastructure, and other domains, yet its meaning and application remain inconsistent. Existing definitions emphasize interdependence, contagion, complexity, uncertainty, cascading effects, and system‐wide disruption, but differ in analytical focus and operational use. This paper reviews major definitional traditions and argues that a working definition and diagnostic framework can clarify the analytical basis of systemic risk. We define systemic risk as potential damage, loss, and impact that propagate through interdependencies, feedbacks, and nonlinear processes within or across interconnected systems. Building on this definition, the paper develops a diagnostic framework based on system structure, propagation pathways, dynamic mechanisms, and cascading consequences. These dimensions help distinguish systemic risks from risks that are severe, complex, or large scale but remain relatively contained, and provide a structured basis for examining how adverse consequences propagate within and across interconnected systems in different domains.