F. Caccioli

P. Barucca

T. Kobayashi

The global financial system can be represented as a large complex network in which banks, hedge funds and other financial institutions are interconnected to each other through visible and invisible financial linkages. Recently, a lot of attention has been paid to the understanding of the mechanisms that can lead to a breakdown of this network. This can happen when the existing financial links turn from being a means of risk diversification to channels for the propagation of risk across financial institutions. In this review article, we summarize recent developments in the modeling of financial systemic risk. We focus, in particular, on network approaches, such as models of default cascades due to bilateral exposures or to overlapping portfolios, and we also report on recent findings on the empirical structure of interbank networks. The current review provides a landscape of the newly arising interdisciplinary field lying at the intersection of several disciplines, such as network science, physics, engineering, economics, and ecology.

Network models of financial systemic risk: a review

Next generation structures and materials are key to aerospace, the built environment and exploring space. Hierarchical materials, fractal structures, and polydisperse systems offer dramatic gains in efficiency. Advances in 3D printing and self-assembly mean that these novel technologies can be practically manufactured.

Extreme materials

Silicon-based electronic computing is hitting energetic and technological barriers, and quantum computing remains a theoretical challenge of the future. To maintain an exponential increase in computing power, we require alternative frameworks. Two which we are studying are memristors and photonic computing.

Low-energy computing

Information science underpins modern society. Quantum information science is creating the next generation of information technology, where effects like superposition and entanglement are exploited to envisage qualitatively new technologies. This field also gives an alternative perspective on physics, wherein information takes centre stage.

Quantum information

Innovation is to organizations what evolution is to organisms: it is how organisations adapt to changes in the environment and improve. New mathematical models of component recombination and the building blocks of economic complexity offer fundamental insights into how firms, countries and technologies develop.

Science of innovation

The global behaviour of local processes depends on the geometry of their underlying space. Studying processes on ideal graphs and on irregular networks derived from real data uncovers surprising behaviour in biological, social and financial systems. The tools of this field include spectral, replica, community and combinatoric techniques.

Graph theory

Institutional risk originates from ordinary economic uncertainties. But when these risks propagate across inter-connected institutions, internal amplification can lead to dramatic exposures. These systemic risks can be mitigated by applying ideas from cascading failures, diversification and extreme value theory.