Systemic Risks, Systemic Solutions (ETH48)

This project is related to our research lines: Systemic Risk and Financial networks

Duration: 36 months (September 2012 - August 2015)

Funding source:  ETH Grant

Project partners (all from ETH Zürich):   Chair of Forest Engineering (Prof. Hans Rudolf Heinimann), Chair of Systems Design (Prof. Frank Schweitzer), Chair of Entrepreneurial Risks (Prof. Didier Sornette), Chair of International Conflict Research (Prof. Lars-Erik Cederman), Chair of Integrative Risk Management and Economics (Prof. Antoine Bommier), Chair of Macroeconomics: Innovation and Policy (Prof. Hans Gersbach), Chair of Sociology, in particular of Modeling and Simulation (Prof. Dirk Helbing), Chair of Mathematical Finance (Prof. Paul Embrechts), Chair of Computational Physics (Prof. Hans Herrmann), Institute for Transport Planning and Systems (Prof. Kay Axhausen), Chair of Decision Theory (Prof. Ryan Murphy)

Official Website: ETH Risk Center


The collaborative project consists of three work packages:

WP1: Systemic Risk as an Emerging Phenomenon (WP Coordinator: Prof. F. Schweitzer)

  • Link modern probabilistic and statistical methods, Extreme Value Theory in particular, with complexity science (complex network theory, agent-based modeling) to improve our understanding of systemic risk phenomena, such as sudden regime shifts, cascading effects, or slow emerging risks

WP2: Financial Crisis (WP Coordinator: Prof. D. Sornette)

  • Improve our understanding of the emergence and the spread of financial crisis and explore novel, cost-effective, more robust institutional arrangements that consider decision biases of agents

WP3: Resources, Energy and Political Instability (WP Coordinator: Prof. L. E. Cederman)

  • Explore interdependencies between macro-systems, particularly resource extraction, energy production, and political stability, to improve our understanding of cross-system links


Systemic risk as an emerging phenomenon

WP 1 aims at developing models of complex adaptive systems in which systemic risks is an emergent feature, and to merge these with recent insights about the occurence of extreme events. Complex interactions e.g. in networks, nested feedback loops, or cascading effects are not fully implemented in such a description. In particular, the relation to risk and the interplay between the risk of (single) system's elements and the risk for the system as a whole is yet to be understood. Work package 1 tries to identify the underlying mechanisms of systemic
risk. This requires to develop tools that detect precursors of systemic risk and, in turn, to explore measures to improve system resilience.

Selected Publications

How damage diversification can reduce systemic risk

Burkholz, Rebekka; Garas, Antonios; Schweitzer, Frank

Physical Review E, pages: 042313, volume: 93


Systemic risk in multiplex networks with asymmetric coupling and threshold feedback

Burkholz, Rebekka; Leduc, Matt; Garas, Antonios; Schweitzer, Frank

Physica D, pages: 64--72, volume: 323-324


A framework for cascade size calculations on random networks

Burkholz, Rebekka; Schweitzer, Frank

Physical Review E, volume: 97, number: 4