Illustrative: an implied-volatility surface over strike and maturity with its smile and term structure, or a rolling spectrogram

Risk Academy, led by the Nexus Consortium · Course catalogue · Finance and Economics

Banking and Financial Stability

Financial stability and systemic financial risk

Financial stability and systemic financial risk, taught twice over: as the working methods of the field and as its frontier since 2024, with labs on the Academy's tools, open data and the Nexus Standards.

Core course Frontier course

The discipline

01Core course · L2 Intermediate

Financial stability and systemic financial risk: foundations and practice

This area covers the resilience of banks, insurers, markets and market infrastructure to shocks, and the channels through which stress spreads across the financial system and into the real economy.

Level
L2 Intermediate
Study time
about 24 hours (planning estimate)
Status
In authoring
Prerequisites
An L1 course in the area, or an entry review

Why now

Weak resolution funding undermines confidence that failing systemic banks can be resolved without disorderly spillovers. Financial Stability Board, Thematic Review on Public Sector Backstop Funding Mechanisms: Peer review report, 9 October 2026

Learning outcomes

  1. Define systemic risk and the other key terms of the discipline and use them correctly in a written case
  2. Explain systemic interconnectedness and contagion and fire sales with a worked example and its source
  3. Apply the discipline's method to a documented case and explain each result with its source
  4. Analyse a named case against liquidity and market stress, stating evidence, date and limits

Modules

  1. Systemic interconnectedness
    • Systemic interconnectedness
    • Contagion and fire sales
    • Liquidity and market stress
  2. Non-bank financial intermediation
    • Non-bank financial intermediation
    • Stress testing
    • Crisis management and resolution
  3. Cross-border financial risk
    • Cross-border financial risk
    • Real economy feedback
    • Macroprudential policy
  4. Lab: the discipline's method
    • Credit growing faster than income raises the probability of a banking crisis; a crisis costs a large share of output; a countercyclical capital buffer built in the boom is released when the losses arrive.
    • Work the method through a documented case and explain each result
    • Read the method's sources and stated values

Labs with Academy tools

Open data

Nexus Standards

Teaches

  • NRS-F1 Financial stability and systemic financial risk
  • NRS-H113 Hazard family: Financial-system fragility
  • NRS-M8 Method fabric: Financial risk

Relies on

  • NS-1 The UNI and the artefact catalogue
  • NS-16 UNI application profile (how articles, documents, code, data, APIs and interfaces carry the UNI)
  • NRS-C1 Risk vocabulary and ontology
  • NRS-C2 Risk assessment method
  • NRS-C3 Hazard, exposure, vulnerability and capacity data
  • NRS-C4 Risk data model, identifiers and exchange
  • NRS-C5 Scenarios and stress testing
  • NRS-C6 Systemic and cascading risk

Assessment

  • 40%Lab recordWork the discipline's method through a documented case and explain each result with its source and date
  • 40%Case memoApply the discipline's methods to a named place or organisation, stating evidence and limits
  • 20%Key terms checkShort answers on the key terms, marked against the definitions

Delivery

  • Self-paced online, with the labs in the browser
  • Cohort study over six to eight weeks, with a weekly lab review
  • Co-delivered with a partner institution, inside its own courses

Partner on this course

  • Co-teach a module and bring a current case from your work
  • Host a cohort for your learners, with your own schedule and review
  • Contribute a lab: a dataset your institution publishes openly, or a model
  • Review the course content and its references before it opens
  • Translate the course and adapt its cases to your region

How institutions and experts take part

In the Academy LMS

Course on the learning platform
Intermediate, 4 topics
Cohort group
A community group for each cohort of learners
Achievement
Recorded on completion of the assessed work

Open now in this discipline

References

  1. Financial Stability Board, Thematic Review on Public Sector Backstop Funding Mechanisms: Peer review report, 9 October 2026
  2. Schularick and Taylor, Credit booms gone bust: monetary policy, leverage cycles, and financial crises, 1870–2008, 2012
  3. Laeven and Valencia, Systemic banking crises database II, 2020
  4. Basel Committee on Banking Supervision, Guidance for national authorities operating the countercyclical capital buffer, 2010
02Live map

Activity and exposure in the Gulf of Mexico coast

Night-time lights and population, a proxy for economic activity, with the floods and fires that put assets at risk, over the Gulf of Mexico coast.

The interactive map needs JavaScript; the layer list and sources are below.

Layers 2

Activity and exposure

Latest available

NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth

Loading the latest NASA imagery.

Drag to move. Ctrl or ⌘ and scroll, pinch or the buttons to zoom; hover for the values under the pointer; reset returns to the region.

Activity and exposure, framed on the Gulf of Mexico coast.Satellite and model products as NASA publishes them, each with its own date. They are indicators, not assessments of any place.

Data: NASA GIBS · ASTER GDEM · Blue Marble · © OpenStreetMap contributors · Natural Earth · NASA EONETSources and licences

  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • VIIRS Black Marble night-time lights, NASA Goddard Space Flight Center; distributed by the NASA Level-1 and Atmosphere Archive and Distribution System (LAADS DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Center for International Earth Science Information Network (CIESIN), Columbia University. 2018. Gridded Population of the World, Version 4 (GPWv4): Population Density, Revision 11. NASA Socioeconomic Data and Applications Center (SEDAC). Licensed under CC BY 4.0. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). doi:10.7927/H49C6VHW. CC BY 4.0
  • VIIRS near-real-time products (flood, land surface temperature, snow cover, corrected reflectance), NASA LANCE; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • NASA Fire Information for Resource Management System (FIRMS), VIIRS 375 m active fire product, NASA LANCE; vector tiles via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • ASTER GDEM is a product of METI and NASA (ASTER Global Digital Elevation Model V003, NASA LP DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). Cite as: NASA/METI/AIST/Japan Spacesystems and U.S./Japan ASTER Science Team (2019). ASTER Global Digital Elevation Model V003. doi:10.5067/ASTER/ASTGTM.003. NASA open data
  • Made with Natural Earth. Free vector and raster map data @ naturalearthdata.com. Public domain
  • © OpenStreetMap contributors (ODbL), via NASA GIBS (coastlines, boundaries, roads and place names). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). ODbL
  • Blue Marble, NASA Earth Observatory; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Context on the globe and flat map: coastlines, boundaries, roads and place names from NASA GIBS reference layers (OpenStreetMap data, ODbL, © OpenStreetMap contributors); Blue Marble imagery as an optional base; 3D terrain and the elevation read-out from the ASTER GDEM elevation colour index (5 m to 200 m classes, exaggerated for legibility). Boundaries are drawn as published and imply no position on any territory.
  • Globe: MapLibre GL JS 6.9.1, BSD-3-Clause, © MapLibre contributors.
  • Live events: NASA Earth Observatory Natural Event Tracker (EONET); events are indicative and keep their original source links.
  • NASA GIBS: We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS).
  • Optional layers (4 sources in the layer list: live, forecast, observed and context) print their provider credit on the map and here when switched on; forecasts are model output and derived indices are estimates.

Layers and dates

  • Night-time lights, daily: VIIRS Black Marble (VNP46A2), NASA LAADS DAAC · 12 Oct 2026
  • Population density, 2020: Population: CIESIN, Columbia University, Gridded Population of the World v4.11 (2018), NASA SEDAC, CC BY 4.0 · static
  • Flood water, 3-day composite: VIIRS Global Flood Product, NASA LANCE · 14 Oct 2026
  • Active fires and thermal anomalies: VIIRS NOAA-20 375 m (FIRMS), NASA LANCE FIRMS · 13 Oct 2026
  • Land surface temperature, day, 8-day composite: VIIRS NOAA-20 Level 3, 8-day, NASA LANCE · 14 Sep 2026

03How learning runs

How learning runs, as a process you can run

Select a scenario and press Play: course, pathway, practice, faculty, cells and record.

04What is changing

Frontier course · L3 advanced, programme courses and standards

Financial stability and systemic financial risk: frontier methods

The methods, data, tools and studies that changed financial stability and systemic financial risk between 2024 and 2026, taught by reproducing them on open data.

Level
L3 Advanced
Study time
about 28 hours (planning estimate)
Status
Planned
Prerequisites
Financial stability and systemic financial risk: foundations and practice; Working knowledge of a scripting language (Python or R) for the labs

Why now

Supervisors now run climate scenario exercises across whole systems (the EU one-off Fit-for-55 exercise, 2024 to 2025), and the March 2023 bank runs showed how fast digital deposit flight and network contagion move. Scientific Reports, DebtRank: too central to fail? (Battiston et al.), 2012

Learning outcomes

  1. Explain what changed in financial stability and systemic financial risk since 2024 and cite the studies, data or rules behind each change
  2. Reproduce network contagion on open data and state the uncertainty of the result
  3. Evaluate a 2024 to 2026 study: its question, data, method, limits and what it changes for practice
  4. Design an analysis that combines a frontier method with the faculty's instruments, and justify each choice

Modules

  1. Network contagion
    • Interbank exposure networks
    • DebtRank and default cascades
    • Fire sales and common asset holdings
  2. Climate stress testing
    • NGFS scenarios in supervisory exercises
    • Translating scenarios to credit and market risk
    • System-wide exercises with non-banks
  3. Macroprudential tools
    • Capital buffers and liquidity rules
    • Non-bank financial intermediation
    • Lessons of March 2023
  4. FSB finds gaps in public backstop funding for bank resolution
    • An FSB peer review found only a small number of jurisdictions have pre-arranged public backstop funding that could credibly meet liquidity needs of large systemic banks in resolution, calling the gap material.
    • Financial Stability Board, 9 October 2026
  5. IMF GFSR April 2026 maps amplification risks from the Middle East war
    • The IMF identifies channels that could turn market turmoil into instability, including sovereign rollover risk, carry trade unwinds, forced deleveraging by leveraged nonbanks, stretched AI-related valuations and stress in semiliquid private credit vehicles.
    • International Monetary Fund, 14 April 2026
  6. Reproduction lab
    • Extend the discipline's method with one frontier method and compare its results
    • State the uncertainty and the limits of the result
    • Peer review against a shared checklist
  7. Technology that helps and the risks it carries
    • AI models, tokenisation and regulatory technology.
    • Model risk, cyber accumulation, exposure to quantum attacks on cryptography, and concentration on third-party cloud providers.

Labs with Academy tools

Open data

Nexus Standards

Teaches

  • NRS-F1 Financial stability and systemic financial risk
  • NRS-H113 Hazard family: Financial-system fragility
  • NRS-M8 Method fabric: Financial risk

Relies on

  • NS-1 The UNI and the artefact catalogue
  • NS-16 UNI application profile (how articles, documents, code, data, APIs and interfaces carry the UNI)
  • NRS-C1 Risk vocabulary and ontology
  • NRS-C2 Risk assessment method
  • NRS-C3 Hazard, exposure, vulnerability and capacity data
  • NRS-C4 Risk data model, identifiers and exchange
  • NRS-C5 Scenarios and stress testing
  • NRS-C6 Systemic and cascading risk

Assessment

  • 50%Method reproductionReproduce one frontier method on open data and state the uncertainty of the result
  • 30%Study reviewA critical review of a 2024 to 2026 study: question, data, method, limits, what it changes
  • 20%Peer reviewReview two other learners' reproductions against a shared checklist

Delivery

  • Self-paced online, with the labs in the browser
  • Cohort study over six to eight weeks, with a weekly lab review
  • Co-delivered with a partner institution, inside its own courses

Partner on this course

  • Co-teach a module and bring a current case from your work
  • Host a cohort for your learners, with your own schedule and review
  • Contribute a lab: a dataset your institution publishes openly, or a model
  • Review the course content and its references before it opens
  • Translate the course and adapt its cases to your region

How institutions and experts take part

In the Academy LMS

Course on the learning platform
Expert, 7 topics
Cohort group
A community group for each cohort of learners
Achievement
Recorded on completion of the assessed work

Open now in this discipline

References

  1. Scientific Reports, DebtRank: too central to fail? (Battiston et al.), 2012
  2. Basel Committee, Report on the 2023 banking turmoil, 2023
  3. Financial Stability Board, Thematic Review on Public Sector Backstop Funding Mechanisms: Peer review report, 9 October 2026
  4. International Monetary Fund, Global Financial Stability Report, April 2026: Global Financial Markets Confront the War in the Middle East and Amplification Risks, 14 April 2026
  5. Bank of England, The Bank of England's system-wide exploratory scenario exercise final report, 29 November 2024
  6. Schularick and Taylor, Credit booms gone bust: monetary policy, leverage cycles, and financial crises, 1870–2008, 2012
  7. Laeven and Valencia, Systemic banking crises database II, 2020
  8. Basel Committee on Banking Supervision, Guidance for national authorities operating the countercyclical capital buffer, 2010
05Take part

Take part in the work

Start from who you are.

06Questions

Questions, answers and key terms

Is the course free?
Yes. Every course and learning material of Risk Academy, led by the Nexus Consortium, is free to study, self-paced or with a cohort. Ordinary participation has no fee; paid work, internships and fellowships are separate arrangements.
What does completing a course give me?
A completion record: the course, its version, the date and what was assessed, private by default and shared by you. It stacks into discipline, department and programme achievements. A record states what was studied and assessed and does not certify competence; it is not a licence, a professional title or an employment status.
Where do the data and the places come from?
Every faculty teaches on a twin of a real place built from open data; each layer carries its provider, licence and date, and every result on the Academy states its source. Maps and figures are indicators for teaching, never an assessment of a place.
How do I take part beyond the course?
Form a competence cell of three to seven people, study a shared pathway, take a supervised assignment in the National Working Groups, or bring a cohort from your institution. For organisations.

Key terms

Term

Systemic risk

The risk that distress in part of the financial system impairs the system as a whole.

Term

Contagion

The spread of distress from one institution or market to others.

Term

Fire sale

Forced selling of assets at depressed prices, which spreads losses to other holders.

Term

Macroprudential policy

Policy that targets risks to the financial system as a whole.

ReportsContribute

Contribute evidence from this page.

Reports is the Consortium's quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.

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