NSR - Network and Structural Risk

Definition
Network and Structural Risk (NSR) refers to the exposure a bank faces through the interconnected structure of its clients, counterparties, and ownership networks. It captures how changes or stresses in one entity or sector can propagate across the network, impacting others.

Context
NSR analysis helps banks understand not just individual client risk but how those clients connect within broader corporate, geographic, and financial structures. It supports the identification of concentration, contagion, and systemic vulnerabilities—forming a core analytical layer within Client Network Risk Management (CNRM).