Compliance
Systemic or correlated risk
Risk from model homogeneity causing market shocks.
Definition
Risks that arise when many market participants rely on similar models or common foundation models, producing homogeneous behaviour that can lead to correlated failures, amplified market volatility, or system‑level shocks across the financial sector.
Related Terms
Systemic (Correlated) Risk
Risk from many actors using similar models causing market shocks....
Model Risk
Risk of adverse consequences from incorrect or misused model outputs....
Model-intrinsic risk
Risk stemming from a model's inherent capabilities or behaviours....
technology risk
Risks arising from use of information technology and systems....
Systemic-risk GPAI model
GPAI model designated as posing systemic risks to the Union....