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Systemic risk - The elements of risk.

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| October 01, 2003 | COPYRIGHT 2003 Financial Times Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

(From Reinsurance)

A new study from Swiss Re's research division, sigma, considers the role that reinsurers play in absorbing risk from insurers and questions whether they themselves become a risk.

The study uses the notion of systemic risk as a way of analysing the potential threat to reinsurers. This is defined as the danger of an event leading to a loss of economic value and/or of confidence in the financial system. This in turn would have grave consequences for the real economy.

The discussion assumes systemic risk in the following cases: the lack of reinsurance cover on the one hand, and bankruptcies of primary insurers and banks caused ...

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