Definition of Systemic Financial Risk

Textbook definition of Systemic Financial Risk, taken from: “The Group of Ten: Report on Consolidation in the Financial Sector”: 

“Systemic financial risk is the risk that an event will trigger a loss of economic value or confidence in, and attendant increases of uncertainty about, a substantial portion of the financial system that is serious enough to quite probably have significant adverse effects on the real economy. Systemic risk events can be sudden and unexpected, or the likelihood of their occurrence can build up over time in the absence of appropriate policy responses. The adverse real economic effects from systemic problems are generally seen as arising from disruptions to payment systems, to credit flows, and from the disruption of asset values.”