Increased trade has led to the globalization of financial markets, making them more interrelated. A single failure could trigger a domino effect, leading to a global financial collapse. Mitigating this risk requires advanced risk management tools and technology, as well as regulatory measures to replace OTC markets with exchanges. However, excessive regulation could lead to liquidity and volatility problems. The global mitigation of financial success is a work in progress.
The integration of the world’s economies and financial systems is the result of the increase in trade. The free flow of ideas, assets and services has led to the globalization of the financial markets. The world economies are each more interrelated between trade and international inversions. Global financial success is the potential for a global systemic failure.
Systemic success is success associated with the failure of a financial system or of the whole market. The global financial success of the total market collapse would probably occur as a domino effect. Given that the global financial systems are interrelated, the instability of the financial system could be created by the failure of a single element within the system.
A reaction in the cadena, or efecto domino, can cause a similar failure in a closely related market. Theoretically, this sequence of events could continue until the point of the global financial collapse. The financial instability of the interrelated markets may contain the necessary catalyst to create a self-sustainable chain of events with catastrophic consequences.
It is impossible to determine the potential sequence of events caused by the failure of a single industry. Sensible dependence is a phenomenon common to chaos theory. The dependencia de las industrialis interrelacionadas puede ser difícil de establecer a escala mundial.
The last development in the follow-up of global financial management is through gigantic data bases called global management maps. A follow-up of the exposure is carried out to the success of the banks and the large financial institutions with a view to monitoring the systemic success. Following systemic success does not avoid systemic success. Mitigating global financial success can be incredibly comprehensive.
The Red de Respuesta al Riesgo (RRN) has been desarrollada para responder al riesgo complejo interdependiente. The corporations, the governments and the regulatory authorities have submitted to global decision-makers to form a community of Officials of Riesgos. These officials keep the most advanced processes and tools for analysis and management of the most advanced risks at their disposal. If you expect a proactive response in times of financial crisis.
Technology and access to better and more complete information may be the answer to the mitigation of global financial success. Transparency in the free trade sector (OTC) can broaden access to information and result in electronic trading platforms connected to centralized counterparty compensation chambers. Access to technology could expose underlying problems in the financial markets.
Regulatory measures have been taken to eliminate the OTC markets and exchanges will be established to replace them. Some believe that no amount of regulation can overcome technological failure or intentional manipulation. To replace the OTC trade with the interchange trade, the markets may have to be restructured. Liquidity and volatility problems may be the consequences of excessive regulation. The global mitigation of financial success is a work in progress.
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