The risk associated with the collapse or failure of a company, industry, financial institution or an entire economy is called

The risk associated with the collapse or failure of a company, industry, financial institution, or an entire economy is referred to as systemic risk. This type of risk is inherent in the entire system and can lead to widespread consequences beyond the individual entity that fails. Systemic risk can stem from various factors, including economic downturns, financial crises, or significant disruptions in the market that may negatively impact multiple entities simultaneously. It emphasizes the interconnectedness of institutions and how the failure of one can cascade throughout the system, potentially leading to a financial crisis or economic recession. Managing systemic risk is crucial for regulators and financial institutions to ensure stability in the financial system.