Systemic risk refers to the potential for an event to trigger a cascade of failures or major disruptions throughout an entire system, such as a financial market, an industry, or the economy. It is not about the failure of a single entity but the risk that the failure of one or more components will spread and cause the entire system to collapse or function improperly. This contagion effect threatens the stability and operation of the whole system, leading to severe and widespread consequences.

A. This describes interconnectedness risk or internal contagion within a single organization, not the failure of an entire market or system.

B. This is a specific type of supply chain risk for one organization, which is a component of operational risk, not the definition of systemic risk.

C. This defines a key-person or human capital risk, which is an internal operational risk confined to a specific organization.

1. Schwarcz, S. L. (2008). Systemic Risk. The Georgetown Law Journal, 97(1), 193-249. The introduction (p. 193) defines systemic risk as "a risk that an event will trigger a loss of economic value or confidence in, and collapse of, a substantial part of the financial system."

2. De Bandt, O., & Hartmann, P. (2000). Systemic Risk: A Survey. European Central Bank Working Paper No. 35. Section 2, "What is Systemic Risk?", discusses systemic risk as an event that triggers a chain reaction of failures affecting a large portion of the financial system.

3. International Monetary Fund (IMF). (2009). Global Financial Stability Report: Responding to the Financial Crisis and Measuring Systemic Risks. Chapter 3, "Measuring Systemic Risks," defines systemic risk as "a risk of disruption to financial services that is caused by an impairment of all or parts of the financial system and has the potential to have serious negative consequences for the real economy." (p. 103).