of the financial network propagate risk. Glasserman and Young (2015) applied the Eisenberg and Noe (2001) to modelling the effect of shocks to banking networks. They develop general bounds for the effects of network connectivity on default probabilities. In contrast to most of the structural systemic risk literature, their results are quite general and do not require assuming a specific network architecture or specific shock distributions. Risk-neutral valuation: price indeterminacy and open problems Generally speaking, risk-neutral pricing in structural models of financial interconnectedness requires unique equilibrium prices at maturity in dependence of the exogenous asset price vector, which can be random. While financially interconnected systems with debt and equity cross-ownership without derivatives are fairly well understood in the sense that relatively weak conditions on the ownership structures in the form of ownership matrices are required to warrant uniquely determined price equilibria, the Fischer (2014) model needs very strong conditions on derivatives – which are defined in dependence on any other liability of the considered financial system – to be able to guarantee uniquely determined prices of all system-endogenous liabilities. Furthermore, it is known that there exist examples with no solutions at all, finitely many solutions (more than one), and infinitely many solutions. At present, it is unclear how weak conditions on derivatives can be chosen to still be able to apply risk-neutral pricing in financial networks with systemic risk. It is noteworthy, that the price indeterminacy that evolves from multiple price equilibria is fundamentally different from price indeterminacy that stems from market incompleteness. Factors Factors that are found to support systemic risks are: Economic implications of models are not well understood. Though each individual model may be made accurate, the facts that (1) all models across the board use the same theoretical basis, and (2) the relationship between financial markets and the economy is not known lead to aggravation of systemic risks. Liquidity risks are not accounted for in pricing models used in trading on the financial markets. Since all models are not geared towards this scenario, all participants in an illiquid market using such models will face systemic risks. Diversification Risks can be reduced in four main ways: avoidance, diversification, hedging and insurance by transferring risk. Systematic risk, also called market risk or un-diversifiable risk, is a risk of a security that cannot be reduced through diversification. Participants in the market, like hedge funds, can be the source of