Systemic risk is the risk that a firm involved in an interest rate swap may not meet its payment obligations.

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Systemic risk refers to the risk of collapse of an entire financial system or entire market, due to the failure of a single entity or group of entities, which can lead to a crisis when the failure spreads across the financial system. The risk that a firm involved in an interest rate swap may not meet its payment obligations is known as "credit risk" or "counterparty risk," not systemic risk.

Systemic Risk Is the Risk That a Firm Involved in an Interest