Systemic risk (financial economics) is the risk of disruption to financial services that is caused by an impairment of all or parts of the financial system. It refers specifically to the potential for initial failures or distress in one or more financial institutions, markets, or payment systems to trigger a cascade of subsequent failures or disruptions throughout the interconnected financial network, leading to a widespread financial crisis or economic collapse. This concept emphasizes the interconnectedness and feedback loops within the financial system that can amplify initial shocks through channels such as counterparty exposures, asset price contagion, and loss of confidence. Analyzing and mitigating systemic risk is a fundamental concern in financial security, international finance, risk analysis, and quantitative finance, informing regulatory frameworks and policies, including aspects of insurance regulations, designed to preserve overall financial stability and prevent system-wide instability.