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      Question

      What is 'Systemic Risk' in the banking

      sector?
      A The risk that an individual bankโ€™s IT system will crash. Correct Answer Incorrect Answer
      B The risk that the failure of one financial institution will trigger a collapse across the entire industry. Correct Answer Incorrect Answer
      C The risk of loss due to employee fraud. Correct Answer Incorrect Answer
      D The risk associated with fluctuating stock prices of a single company. Correct Answer Incorrect Answer
      E The risk of a bank branch being physically damaged. Correct Answer Incorrect Answer

      Solution

      Systemic risk in the banking sector is the hazard that a failure, default, or crisis in one financial institution will trigger a domino effect, causing widespread instability or the collapse of the entire financial system. It threatens the broader economy rather than just a single entity.

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