Teaching Systemic Risk: An In-Class Simulation for Diverse Audiences

William Wood

International Journal of Risk and Contingency Management (IJRCM), 2015, vol. 4, issue 4, 49-52

Abstract: This article shows how an in-class simulation can be used to teach the joint failure probability of statistically independent failures, and then to teach the more complex problem of system or “common-mode” failure. The technique has many potential applications, but here focuses on bank failures as a readily accessible application. This teaching simulation has been successfully presented to diverse audiences since 2011. The original audience consisted of high school, community college and university instructors and the case has since been taught to additional continuing education groups and 400-level Economics students.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jrcm00:v:4:y:2015:i:4:p:49-52

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International Journal of Risk and Contingency Management (IJRCM) is currently edited by Narasimha Rao Vajjhala

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