Interconnected risks are rising, but this isn’t 2008
Corrado Tiralongo - Mar 24, 2026
What’s driving the current concern
A recent opinion piece in The New York Times1 argues that the global financial system is becoming increasingly fragile, not because of a single risk, but due to a network of interconnected vulnerabilities.
The author highlights three key areas:
- Private credit, now a roughly $2 trillion market, with limited transparency and illiquidity that could amplify stress if investors rush to exit.
- Equity market concentration, where a small group of large technology companies now represents a disproportionate share of index returns.
- Geopolitical and physical risks, including tensions involving Iran and Taiwan, which could disrupt energy supply and semiconductor production.
The central argument is that these risks aren’t isolated. They’re linked through the same financial system, meaning that stress in one area can quickly spread across others.
In this framework, the concern isn’t simply what goes wrong, but how quickly and broadly shocks can propagate.
Framing today’s risks
It’s tempting to anchor today’s risks to history.
- To the 1970s for energy
- To the dot-com era for technology
- To 2008 for credit
But the current environment does not fit neatly into any one of these periods.
Instead, it reflects a combination of all three:
- Geopolitical pressures influencing real-economy inputs
- Elevated concentration and expectations in equity markets
- Growing reliance on less liquid forms of financing
Each of these in isolation is manageable. What matters is that they now coexist within the same system.
This doesn’t necessarily point to a crisis.
But it does suggest a market environment where shocks can travel faster, correlations can rise more quickly, and diversification may be tested when it is needed most.
Systemic risk is rising, but the transmission mechanism matters
This framing is directionally correct.
We believe that we’re operating in an environment where cross-market linkages are increasing, and where financial markets are more exposed to geopolitical and real-economy shocks than in the past.
However, the key question for investors isn’t whether risks exist, but how those risks translate into market outcomes. Not all systemic risks become systemic crises.
What’s different from 2008
The comparison to the global financial crisis is intuitive, but incomplete.
In 2008, the system was highly leveraged, opaque and concentrated within the banking sector. Once losses emerged, forced deleveraging created a rapid and self-reinforcing collapse.
Today’s risks are different:
- Private credit introduces liquidity risk, but not the same level of system-wide leverage.
- Large-cap technology companies are concentrated, but financially strong with robust balance sheets.
- Geopolitical risks are elevated, but partially reflected in current market pricing.
This suggests a different regime, one that may be less vulnerable to sudden systemic collapse, but more exposed to rolling shocks and periods of instability.
Private credit: a liquidity pressure point
The concerns around private credit are valid, particularly around transparency and liquidity. The key risk is behavioural and liquidity driven:
- Investors can’t easily sell private assets.
- In periods of stress, they sell what they can.
- That often means liquid public equities.
This creates a transmission channel between private and public markets.
However, unlike 2008, this is less about solvency risk and more about liquidity-driven repricing, which tends to result in volatility rather than systemic failure.
Equity concentration: a structural vulnerability
The concentration of returns in a small number of technology companies is one of the defining features of today’s market.
This isn’t just a valuation issue. It’ss a portfolio construction issue across the entire system. When concentration increases:
- Passive and active portfolios become more aligned.
- Crowding intensifies.
- Market moves become more sensitive to a small number of names.
This increases market sensitivity, particularly if combined with:
- Liquidity stress
- Positioning unwinds
- External shocks
Geopolitics and the rise of “physical risk”
One of the more important observations in the article is the shift toward physical and geopolitical risk. Energy markets, supply chains, and semiconductor access are increasingly central to market outcomes.
This aligns with our broader view:
- Markets are transitioning from being primarily driven by financial conditions to being increasingly influenced by geopolitical and real-economy constraints.
However, markets do not ignore these risks. They reprice them, often unevenly and abruptly.
A more connected system, not necessarily a more fragile one
The most important takeaway is the idea of shared transmission channels:
- Private credit financing → AI infrastructure → public equity markets
- Energy shocks → input costs → corporate margins
- Geopolitical disruptions → supply chains → global growth
This connectivity increases the speed at which shocks move through the system. But it doesn’t necessarily mean the system is more fragile in the same way as 2008. Instead, it points to a different environment; one that’s more complex, more interconnected and more prone to episodic volatility.
If the defining feature of this environment is how risks transmit rather than where they originate, then portfolio construction must focus on resilience rather than prediction.
Portfolio implications: focusing on resilience
From a portfolio perspective, we believe the objective isn’t to position for a single outcome, but to manage how portfolios behave across a range of scenarios.
Reflecting this view, our current positioning has emphasized the following:
- Maintaining exposure to equities, while actively managing concentration risk within a narrow set of growth-oriented names
- Increasing diversification of return drivers through multi-factor strategies that explicitly balance return and risk exposures
- Incorporating liquid alternative strategies, including managed futures and risk parity, which may provide diversification during periods of market stress
- Placing greater emphasis on liquidity-aware portfolio construction, recognizing that market drawdowns may be driven as much by flows as fundamentals
These positioning decisions reflect our assessment of current market conditions and may evolve as those conditions change. Outcomes aren’t guaranteed, and these approaches may behave differently across market environments.
This isn’t about avoiding risk. It’s about ensuring portfolios are structured to absorb shocks without requiring reactive decisions.
Bottom line: fragile dynamics, not a broken system
The risks identified in the article are real and worth monitoring. But this doesn’t appear to be a direct repeat of 2008.
Instead, we’re operating in a regime characterized by:
- Periodic, liquidity-driven market dislocations
- Higher correlations during stress
- Greater dispersion beneath index-level performance
For investors, the implication is clear:
The focus shouldn’t be on predicting the next crisis, but on building portfolios that remain resilient regardless of how it unfolds.
Corrado Tiralongo (he/him)
Vice President, Asset Allocation & Chief Investment Officer Canada Life Investment Management Ltd.