This tutorial demonstrates how to analyze and visualize contagion risk among 20 financial institutions using Power BI Desktop. Contagion risk, also known as contingent risk, occurs when the failure of one institution triggers a chain reaction, impacting others due to their interconnected exposures. The video illustrates this concept with an example: if ECU defaults on its loans to PLS, PLS in turn defaults to ZCG, creating a domino effect. The Power BI dashboard aims to highlight these intricate relationships and their potential impact on the entire industry.
The tutorial guides viewers through creating a comprehensive Power BI dashboard, starting with importing financial exposure data. It then demonstrates the use of various visuals: a bar chart to show individual exposures, a decomposition tree to illustrate total exposure and direct relationships, and a matrix to provide a bird’s-eye view of all inter-institutional exposures. Finally, the tutorial introduces a specialized network navigator visual (available via a GitHub link) to graphically represent the complex web of links between institutions, allowing for the identification of critical institutions that could trigger widespread financial distress.
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