Systemic Risk Centre at LSE

THE SYSTEMIC RISK CENTRE AT LSE

SRC Philosophy: Systemic risk is created by the interaction of financial market participants. Systemic risk is not dropped onto markets like an asteroid hitting the earth. Systemic risk is built into the system and the participants. Stability is destabilising. Low market volatility warns of impending crises.

B

Further adjust stance

Adjust stance

1800

1850

B

C

1900

Archduke Ferdinand assassinated, upsetting clearing Hoarding of cash and gold

C

stigma effect

A exchanges closing

failure to deliver across borders Portfolio insurance Index falls

Sale of stocks

B

Adjust hedges

Investor decides to sell

S&P 500 Log scale

A A

1906 Crisis 1914 Crisis

Civil War

Push bridge

Great Depression

Bridge moves

Black Monday 1987

Financial Millennium Bridges

Stagflation and HF crisis

SRC Research: The fundamental nature of systemic risk; liquidity; the limits to estimating and measuring risk; the mechanisms that exacerbate instability; the pitfalls of using statistical risk models for policy-making; the economic impact of financial regulation; the origins of financial crises.

Flash crash

SRC research suggests that the regulatory drive to reduce risk may make future crises worse and more likely.

Since 2013 the SRC team have researched the fundamental question of how to balance economic prosperity and the stability of the financial system.

1950

Investor also sells on increased volume Volumes shoot up

C

Price fall

HFT pass the parcel Wait for real money

2000

www.systemicrisk.ac.uk

THE SYSTEMIC RISK CENTRE AT LSE

Fintech

SRC Website: www.systemicrisk.ac.uk has links to publications and recorded talks. The site showcases SRC research that has set the agenda about topics including bank capital, risk management, clearing and regulation.

SRC Team and productivity: The SRC has two academic directors, Jean-Pierre Zigrand and Jon Danielsson, working alongside seven senior academic co-investigators. The SRC team also includes four postdoctoral researchers, two data researchers, eight affiliated PhD students and 75 research associates at universities and institutions across the UK, EU and the US. Since 2013 the SRC has delivered: n 358 publications n 31 opinion pieces n 51 seminars n 60 conferences, workshops and public lectures SRC Connections: The SRC contributes independent advice and analysis to institutions including European central banks, the US Federal Reserve and the UK’s FCA, as well authorities such as the BIS, the IMF, the FSB, ESMA and EBA. SRC Forum: The unique, highly valued, informal forum for senior market participants and policymakers to discuss market practice, processes and vulnerabilities and consider regulation and macro-prudential policy with greater insight.

Central banks Regulators and policymakers

Financial infrastructure

Risk analysis companies

Asset managers

Data and technology vendors

Hedge funds

Insurance companies

Academic institutions Financial journalists

Banks

SRC Events: Often run in conjunction with central banks, SRC seminars, workshops and conferences attract senior participants from the UK, the US, continental Europe and Asia. The SRC has hosted speeches by key policymakers and central bankers from around the world.

SRC Breakfast meetings: The SRC organises high-level briefings under the Chatham House Rule anchored by a senior policymaker delivering a keynote address followed by Q&A.

www.systemicrisk.ac.uk Published by Systemic Risk Centre The London School of Economics and Political Science Houghton Street London WC2A 2AE Š Systemic Risk Centre 2017