How does Systemic Risk play out?

Systemic risk can play out in a different number of ways. The most common outcomes being; the domino effect, financial contagion and loss of trust.

It can play out in a number of ways. The domino effect is when the collapse of a single entity sends shockwaves through the system, taking down unstable organizations with them.

In addition, in some cases, seemingly healthy organizations are impacted by the overall economic climate, as a result of over interconnectedness. This is known as financial contagion.

Finally, we can look at Bitcoin itself as the offspring of the Loss of Trust between capital providers and lenders, where the original crypto-anarchists / enthusiasts turned to cryptocurrencies as the result of a justified disillusionment with the state of consumer banking in the years following the collapse.