What does systemic risk pertain to?

Systemic risk refers to the potential for a collapse of an entire financial system or market as a whole, rather than just the failure of individual entities. This type of risk is driven by interconnections within the financial system, where the distress of one institution can lead to widespread instability, affecting multiple sectors and potentially causing a cascading effect throughout the economy. Examples include the 2008 financial crisis, where the failure of major financial institutions led to severe repercussions across global markets.

In contrast, the other options focus on specific or isolated risks. The failure of a single company pertains to idiosyncratic risk, which is fundamentally different as it doesn't necessarily threaten the entire market. Investment fraud is related to unethical practices within markets but does not encompass the broader implications of systemic risk. Currency fluctuations impact international trade and investments but again do not represent a systemic threat to the entire financial system. Thus, the correct option directly addresses the overarching threat that systemic risk poses to the integrity and stability of financial markets.