A framework for analyzing contagion in banking networks

The study of contagion in financial systems is very topical in light of recent events in the global markets. "Contagion" refers to the spread of defaults through a system of financial institutions, with each successive default causing increasing pressure on the remaining components of the system. The term "systemic risk" refers to the contagion-induced threat to the financial system as a whole, due to the default of one (or more) of its constituent institutions. The ultimate question for me is how mathematical models can help us understand systemic risk. In this talk I will explore some of the background concepts, then look at certain  "deliberately simplified models of systemic risk" to see what they may say about the problem.