DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT A: ECONOMIC AND SCIENTIFIC POLICIES ECONOMIC AND MONETARY AFFAIRS Defining and Measuring Systemic Risk

Financial surveillance before the current crisis erupted suggested that problems were forming but the indications were too imprecise to permit a policy response. Work is currently being undertaken to improve the measurement, monitoring and management of systemic risk. That requires it to be defined, which is unproblematic, and operationalized, which is not. While promising methods to measure risk exist, the data demands are so pronounced that statistical risk monitoring will remain an imprecise science for years to come. [IP/A/ECON/FWC/2009_040/C3] 23 November 2009 . Defining and measuring systemic risk ____________________________________________________________________________________________ 1 This document was requested by the European Parliament's Committee on Economic and Monetary Affairs.