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Insurance is often easy to obtain against "systemic risks" because a party issuing that insurance can pocket the premiums, issue dividends to shareholders, enter insolvency proceedings if a catastrophic event ever takes place, and hide behind limited liability. Such insurance, however, is not effective for the insured entity.[1]

One argument that was used by financial institutions to obtain special advantages in bankruptcy for derivative contracts was a claim that the market is both critical and fragile.

Systemic risk can also be defined as the likelihood and degree of negative consequences to the larger body. With respect to federal financial regulation, the systemic risk of a financial institution is the likelihood and the degree that the institution's activities will negatively affect the larger economy such that unusual and extreme federal intervention would be required to ameliorate the effects.[2]

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[1] What Is Systemic Risk, and Do Bank Regulators Retard or Contribute to It? George G. Kaufman and Kenneth E. Scott The Independent Review, v. VII, n. 3, Winter 2003, ISSN 1086-1653, Copyright © 2003, pp. 371– 391.

[2] http://en.wikipedia.org/wiki/Systemic_risk