  The global financial system can be represented as a large complex network in
which banks, hedge funds and other financial institutions are interconnected to
each other through visible and invisible financial linkages. Recently, a lot of
attention has been paid to the understanding of the mechanisms that can lead to
a breakdown of this network. This can happen when the existing financial links
turn from being a means of risk diversification to channels for the propagation
of risk across financial institutions. In this review article, we summarize
recent developments in the modeling of financial systemic risk. We focus in
particular on network approaches, such as models of default cascades due to
bilateral exposures or to overlapping portfolios, and we also report on recent
findings on the empirical structure of interbank networks. The current review
provides a landscape of the newly arising interdisciplinary field lying at the
intersection of several disciplines, such as network science, physics,
engineering, economics, and ecology.
