10.1.3 Systemic risk

493. This concept of financial risk can be further refined by introducing the concept of ‘systemic risk’. Moloney’s principal idea for assessing the systemic relevance of an investment firm is sound, but the practical consequences are too high-level to fully capture the actual systemic risk of an investment firm. To fully assess the risk profile of an investment firm, one also has to assess whether the investment firm might pose a systemic risk, which will be closely linked to the amount of financial risk to which the investment firm is exposed but should also capture other aspects. The assessment of systemic risk is not dictated by the activities performed by the investment firm, as proposed by Moloney, but it is influenced by the business model, the size of the activities and the complexity and interconnectedness of the investment firm. See also Section 8.4 and the final part of Section 10.4 for the methods to assess systemic relevance of investment firms proposed in this study.