2006/09/30 by Kartik Anand, Reimer Kühn · 1 citation
Economics, Econometrics and Finance · Environmental Science · Physics and Astronomy · #Complex Network Analysis Techniques #Complex Systems and Time Series Analysis #Ecosystem dynamics and resilience #cond-mat.dis-nn #physics.soc-ph #q-fin.RM
paper · pdf · doi:10.1103/physreve.75.016111
13 pages, 7 figures. Accepted in Physical Review E
arxiv created 2006/12/06 · openalex publication_date 2007/01/29 · arxiv updated 2009/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
In this paper we explore the functional correlation approach to operational risk. We consider networks with heterogeneous a priori conditional and unconditional failure probability. In the limit of sparse connectivity, self-consistent expressions for the dynamical evolution of order parameters are obtained. Under equilibrium conditions, expressions for the stationary states are also obtained. Consequences of the analytical theory developed are analyzed using phase diagrams. We find coexistence of operational and nonoperational phases, much as in liquid-gas systems. Such systems are susceptible to discontinuous phase transitions from the operational to nonoperational phase via catastrophic breakdown. We find this feature to be robust against variation of the microscopic modeling assumptions.