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Realistic credit risk assessment, the estimation of losses from counterparty's failure, is central for the financial stability. Credit risk models focus on the financial conditions of borrowers and only marginally consider other risks from…

Risks threatening modern societies form an intricately interconnected network that often underlies crisis situations. Yet, little is known about how risk materializations in distinct domains influence each other. Here we present an approach…

Inspired by the bankruptcy of Lehman Brothers and its consequences on the global financial system, we develop a simple model in which the Lehman default event is quantified as having an almost immediate effect in worsening the credit…

We propose a generic system model for a special category of interdependent networks, demand-supply networks, in which the demand and the supply nodes are associated with heterogeneous loads and resources, respectively. Our model sheds a…

We study the influence of clustering, more specifically triangles, on cascading failures in interdependent networks or systems, in which we model the dependence between comprising systems using a dependence graph. First, we propose a new…

An asset network systemic risk (ANWSER) model is presented to investigate the impact of how shadow banks are intermingled in a financial system on the severity of financial contagion. Particularly, the focus of this study is the impact of…

Financial networks are dynamic. To assess their systemic importance to the world-wide economic network and avert losses we need models that take the time variations of the links and nodes into account. Using the methodology of classical…

After decades of research, cascading blackouts remain one of the unresolved challenges in the bulk power system operations. A new perspective for measuring the susceptibility of the system to cascading failures is clearly needed. The newly…

We study the effectiveness of recovery strategies for a dynamic model of failure spreading in networks. These strategies control the distribution of resources based on information about the current network state and network topology. In…

In today's global economy, supply chain (SC) entities have become increasingly interconnected with demand and supply relationships due to the need for strategic outsourcing. Such interdependence among firms not only increases efficiency but…

An interbank market lets participants pool the risk arising from the combination of illiquid investments and random withdrawals by depositors. But it also creates the potential for one bank's failure to trigger off avalanches of further…

This paper considers a model for cascades on random networks in which the cascade propagation at any node depends on the load at the failed neighbor, the degree of the neighbor as well as the load at that node. Each node in the network…

The crowd panic and its contagion play non-negligible roles at the time of the stock crash, especially for China where inexperienced investors dominate the market. However, existing models rarely consider investors in networking stocks and…

Whereas traditional credit scoring tends to employ only individual borrower- or loan-level predictors, it has been acknowledged for some time that connections between borrowers may result in default risk propagating over a network. In this…

We study cascading failures in networks using a dynamical flow model based on simple conservation and distribution laws to investigate the impact of transient dynamics caused by the rebalancing of loads after an initial network failure…

Cascading blackouts typically occur when nearly simultaneous outages occur in k out of N components in a power system, triggering subsequent failures that propagate through the network and cause significant load shedding. While large…

The existence of asymmetric information has always been a major concern for financial institutions. Financial intermediaries such as commercial banks need to study the quality of potential borrowers in order to make their decision on…

Cascading failures and epidemic dynamics, as two successful application realms of network science, are usually investigated separately. How do they affect each other is still one open, interesting problem. In this letter, we couple both…

Achieving safety in autonomous multi-agent systems, particularly in time-critical tasks like rendezvous, is a critical challenge. In this paper, we propose a distributionally robust risk framework for analyzing cascading failures in…

Cascading failures, such as bankruptcies and defaults, pose a serious threat for the resilience of the global financial system. Indeed, because of the complex investment and cross-holding relations within the system, failures can occur as a…