Stefano Battiston is senior researcher in chair of complex systems design at ETH in Zurich. His work applies the complex networks approach both to the empirical analysis of large economic networks and the modeling of their dynamics. His main activity at the frontier of physics and economics has made an impact on both communities, by covering topics such as corporate control, innovation, decision-making, and financial risk. A collateral line of research has lead to interesting applications in computer science in the field of trust algorithms for on-line social networks. In recent years, his main interests have been financial contagion, default cascades, and propagation of financial distress, where he combines the insights from the statistical mechanics of networks with the analysis of economic incentives. He is currently involved in the coordination of the European Project FOC, aimed at anticipating structural instabilities in global financial networks. He also manages a Swiss project on the impact of OTC derivatives on systemic risk.
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We develop a novel stress-test framework to monitor systemic risk in financial systems. The modular structure of the framework allows to accommodate for a variety of shock scenarios, methods to estimate interbank exposures and mechanisms of distress propagation.