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Asset Management Nexus · Financial-system transmission

Financial-system transmission

Risks in the real economy, such as a flood, a technology shift or a supply shock, reach asset managers through the value of the companies, bonds and real assets they hold. Once there, the behaviour of investors and funds can amplify the shock and pass it to other parts of the financial system. This page shows how real-system and financial vulnerabilities propagate, as part of the financial discipline overview.

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Publisher
The Global Risks Alliance
Field
Capital markets and investment, Climate and hazards, Biodiversity and nature
Status
Established
Service level
R0: information and enquiries

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Layers 3

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Latest available

NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth

Loading the latest NASA imagery.

Drag to move. Ctrl or ⌘ and scroll, pinch or the buttons to zoom; hover for the values under the pointer; reset returns to the region.

For financial-system transmission, in GRA's spatial-finance reading, the map opens on population density, night lights and flood water with relief in 3D and built-up and settlement extent from NASA GIBS, framed on World; every other NASA layer, live feed and forecast waits in the layer list.Satellite and model products as NASA publishes them, each with its own date; indicators, not assessments of any place; claim ceiling INTEGRATED.

Data: NASA GIBS · ASTER GDEM · Blue Marble · © OpenStreetMap contributors · Natural Earth · GDACS · CIESIN/Columbia, NASA SEDAC HBASESources and licences

  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Center for International Earth Science Information Network (CIESIN), Columbia University. 2018. Gridded Population of the World, Version 4 (GPWv4): Population Density, Revision 11. NASA Socioeconomic Data and Applications Center (SEDAC). Licensed under CC BY 4.0. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). CC BY 4.0
  • VIIRS Black Marble night-time lights, NASA Goddard Space Flight Center; distributed by the NASA Level-1 and Atmosphere Archive and Distribution System (LAADS DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • VIIRS near-real-time products (flood, land surface temperature, snow cover, corrected reflectance), NASA LANCE; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • GPM IMERG precipitation, NASA Precipitation Processing System; distributed by the NASA Goddard Earth Sciences Data and Information Services Center (GES DISC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • SMAP Level 4 soil moisture and snow mass, NASA Global Modeling and Assimilation Office; distributed by the NASA National Snow and Ice Data Center DAAC; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • ASTER GDEM is a product of METI and NASA (ASTER Global Digital Elevation Model V003, NASA LP DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Made with Natural Earth. Free vector and raster map data @ naturalearthdata.com. Public domain
  • © OpenStreetMap contributors (ODbL), via NASA GIBS (coastlines, boundaries, roads and place names). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). ODbL
  • Blue Marble, NASA Earth Observatory; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Context on the globe and flat map: coastlines, boundaries, roads and place names from NASA GIBS reference layers (OpenStreetMap data, ODbL, © OpenStreetMap contributors); Blue Marble imagery as an optional base; 3D terrain and the elevation read-out from the ASTER GDEM elevation colour index (5 m to 200 m classes, exaggerated for legibility). Boundaries are drawn as published and imply no position on any territory.
  • Globe: MapLibre GL JS 6.9.1, BSD-3-Clause, © MapLibre contributors.
  • Live: GDACS (EC JRC / UN OCHA) Events are indicative, not official warnings.
  • Context: CIESIN/Columbia, NASA SEDAC HBASE. Center for International Earth Science Information Network (CIESIN), Columbia University, and NASA Socioeconomic Data and Applications Center (SEDAC): Global Human Built-up And Settlement Extent (HBASE) 2010; Seto, Guneralp and Hutyra 2012, Global Grid of Probabilities of Urban Expansion to 2030; Global Urban Heat Island (UHI) Data Set, 2013.
  • Optional layers (35 sources in the layer list: live, forecast, observed and context) print their provider credit on the map and here when switched on; forecasts are model output and derived indices are estimates.

Layers and dates

  • Population density, 2020: Population: CIESIN, Columbia University, Gridded Population of the World v4.11 (2018), NASA SEDAC, CC BY 4.0 · static
  • Night-time lights, daily: VIIRS Black Marble (VNP46A2), NASA LAADS DAAC · 12 Oct 2026
  • Flood water, 3-day composite: VIIRS Global Flood Product, NASA LANCE · 14 Oct 2026
  • Precipitation rate, daily mean: GPM IMERG, NASA GES DISC · 12 Oct 2026
  • Land surface temperature, day, 8-day composite: VIIRS NOAA-20 Level 3, 8-day, NASA LANCE · 14 Sep 2026
  • Root-zone soil moisture, 0 to 100 cm: SMAP Level 4, NASA NSIDC DAAC · 11 Oct 2026

STEM methods
4
Canonical methods this field applies
Topics
9
Subject pages in the field
Counterparts
10
Platforms in shared fields at GCRI, GRF and GRA
Report series
2
Nexus Reports series it contributes to
01In brief

The short answer.

Risk transmission in Asset Management Nexus is the path by which physical, transition, technology and systemic shocks reach the sector and travel onward through balance sheets, markets and the real economy. Analysis uses aggregated, sector-level indicators such as single-issuer weight and herfindahl-Hirschman index of holdings; it assesses no individual firm and is not investment advice.

02Canvas

One field, three institutions.

Canvas · one field, three institutionsDesign, not a record
One field, three institutions: Asset Management Nexus and its counterpartsGCRI studies the field as science, GRF governs and convenes it, GRA builds shared financial understanding; the Nexus Universe tests work across them and the competent authorities decide. Design of the arrangement, not a record.

Fig.How GCRI, GRF and GRA share one field while the authorities decide. Design, not a record.

03Console

Field overview, in outline.

The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.

Field overview: the screen's structure, terms and states for Asset management.Placeholder names and illustrative values; a design, not a record or a live system.
04From real systems to portfolios

How real-economy shocks reach asset values.

SourceChannelEffect on portfolios
Physical hazardsDamage to assets and disruption to operationsLower earnings and asset values; higher insurance costs
TransitionsPolicy, technology and demand shiftsRepricing of business models; stranded assets
Supply disruptionsInput shortages and higher costsLower margins across sectors sharing inputs
Macroeconomic shocksGrowth, inflation and interest rate changesSimultaneous moves across asset classes
05Channels

How shocks travel through managed portfolios.

ChannelMechanism
Common holdingsMany funds hold the same exposed issuers, so repricing hits them together
RedemptionsInvestors redeem from funds after losses, forcing sales into falling markets
Index rebalancingIndex changes after repricing move flows mechanically
StewardshipEngagement and voting change how investee companies respond to risk
06Spatial view

Common exposure is often geographic.

Two funds with different holdings may still share one coastline or one river basin through their companies' assets. Mapping attributed assets shows geographic common exposure that sector weights hide. Evidence continues at GCRI ports and maritime infrastructure and Capital Markets Nexus market liquidity.

07Amplification

How investor behaviour spreads the shock.

Fire sales

Forced selling

Funds facing redemptions or margin calls sell assets, pushing prices down for all holders. See liquidity and redemption.

Overlap

Common holdings

Similar portfolios mean similar losses and similar responses. See portfolio concentration.

Leverage

Margin and leverage

Leverage magnifies losses and can force rapid deleveraging.

09Methods

How transmission is studied.

Transmission is studied with scenario design and stress testing, network models of common holdings and econometrics. Climate scenario analysis combines physical evidence from GCRI's Climate and Hazards with financial models. Each method has limits: scenarios are not forecasts, and models simplify behaviour.

System-wide perspectives are developed with GRA's Financial Stability, and the governance dimension of climate and nature risk is convened by GRF's Climate and Nature Governance.

10Key terms

Terms used on this page.

Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.

TermDefinition
Transmission channelThe route by which a shock reaches financial institutions' balance sheets.
ContagionTransmission of losses or stress from one institution or market to others.
Second-round effectsFeedback from bank losses to the economy, such as tighter credit deepening a downturn.
Common exposureHoldings of the same or similar assets by several institutions, which makes their losses move together.
11Sources

Where this page's references lead.

The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.

12Questions

Questions and answers.

Are asset managers a source of systemic risk?
They can contribute, through liquidity mismatches, leverage and common behaviour. The extent varies by fund structure and market, and is an active research question.
Does the platform stress-test individual portfolios?
No. It studies methods and shared exposures. Any portfolio analysis is the responsibility of each institution.
Where can I learn more about scenarios?
On long-horizon risk and the STEM Commons page on scenario design and stress testing.
How does physical climate risk reach a portfolio?
Through damage and disruption to the assets and companies held, changes in insurance cost and availability, and repricing as markets update their expectations.
Related

Around Asset Management Nexus.

Asset Management Nexus

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