---
entity_slug: bank_systemic_risk
evaluator: null
evaluated_at: '2026-02-23T04:37:10.567719'
overall_score: 4.0
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition clearly captures the concept of contagion risk in banking
    systems - how problems spread from individual institutions to the entire system.
    It's precise and non-circular, though it could be slightly more specific about
    the mechanisms of spread.
- name: source_grounding
  value: 3.0
  max_value: 5.0
  rationale: While Smith does discuss banking problems and their broader economic
    effects in Book II, Chapter 2, the modern term "systemic risk" and its technical
    framing may impose contemporary financial theory concepts that weren't explicitly
    articulated in Smith's original analysis. Smith focuses more on individual bank
    failures and their local effects.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: The "Regulation" domain is perfectly appropriate for systemic risk, as
    this concept is fundamentally about the need for oversight and management of system-wide
    vulnerabilities. This is precisely the type of concern that drives regulatory
    frameworks.
- name: vsm_relevance
  value: 4.0
  max_value: 5.0
  rationale: This entity maps well to S3 (internal regulation/audit) as it represents
    a control concern that requires monitoring and management of system-wide stability.
    It also has relevance to S4 (intelligence) as it involves detecting and responding
    to emerging threats to system viability.
- name: explanatory_value
  value: 4.0
  max_value: 5.0
  rationale: The concept provides genuine explanatory power by illuminating how individual
    bank problems can cascade through interconnected financial networks, explaining
    a key structural vulnerability in banking systems. It goes beyond surface description
    to identify an important systemic mechanism.
---

# Evaluation: Bank Systemic Risk

## definition_precision — 4.0 / 5.0

The definition clearly captures the concept of contagion risk in banking systems - how problems spread from individual institutions to the entire system. It's precise and non-circular, though it could be slightly more specific about the mechanisms of spread.

## source_grounding — 3.0 / 5.0

While Smith does discuss banking problems and their broader economic effects in Book II, Chapter 2, the modern term "systemic risk" and its technical framing may impose contemporary financial theory concepts that weren't explicitly articulated in Smith's original analysis. Smith focuses more on individual bank failures and their local effects.

## domain_placement — 5.0 / 5.0

The "Regulation" domain is perfectly appropriate for systemic risk, as this concept is fundamentally about the need for oversight and management of system-wide vulnerabilities. This is precisely the type of concern that drives regulatory frameworks.

## vsm_relevance — 4.0 / 5.0

This entity maps well to S3 (internal regulation/audit) as it represents a control concern that requires monitoring and management of system-wide stability. It also has relevance to S4 (intelligence) as it involves detecting and responding to emerging threats to system viability.

## explanatory_value — 4.0 / 5.0

The concept provides genuine explanatory power by illuminating how individual bank problems can cascade through interconnected financial networks, explaining a key structural vulnerability in banking systems. It goes beyond surface description to identify an important systemic mechanism.
