In the most recent instalment of Future by Imperial Franklin Allen, Executive Director of the Brevan Howard Centre, talked on Systemic Risk. Hosted by Imperial College Business School and moderated by Financial Times Journalist Ferdinando Giugliano, the talk provided the audience with an insight into Professor Franklin Allen’s research. Titled “What is Systemic Risk,” the discussion covered the five types of systemic risk and policies to deal with them.
“Recent years have been dominated by the financial crisis that started in 2007. The financial services industry is the most regulated industry in most countries. Much of this regulation was designed to prevent financial crises. Unfortunately, it failed to do this” said Professor Allen.
The audience heard that the problem was that the idea previous regulation was based on, namely that the financial system is a “summation of individual risks” taken by agents within the system is flawed. It is not the case that if individual banks and institutions were prevented from taking risks then the financial system itself would not be risky. This is because there is in addition systemic risk that can cause crises in many different ways.
The aim of the Future by Imperial series is to provide a diverse range of topics to students, exposing them to big challenges (e.g. space discovery, cancer research, 3D printing) presented and discussed from a business perspective by leading academics from around the College.