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Macro-prudential risk

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Definition Edit

A macro-prudential risk is a risk that is non-transferrable and cannot be fully insured against, diversified, or hedged at the individual firm level. The strength of the individual firm also does not dilute the risk to the firm from these events.

Overview Edit

This form of risk must be considered on a sector-wide basis, particularly in sectors (like the electric sector) formed of entities that are highly interconnected and interdependent.

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