L ast week, the Financial Stability Board identified nine international insurance companies as GSifis. For those uninitiated in the acronyms beloved of the regulatory community, a GSifi is a global systemically important financial institution. Finding GSifis in the insurance sector is a solution in search of a problem. Having invented the concept of GSifi to describe too-big-to-fail banks, the world’s financial regulators are on the hunt for other businesses which can be treated in a similar way.

As the modern business world becomes more interdependent, there are more and more corporations whose failure would have a substantial impact on many others, a theme extensively developed by Barry Lynn in his book Cornered.

Globalisation means that business may be domestically concentrated even if internationally competitive. Outsourcing means that supply chains are longer, more complex, and often shared by different companies in the same industry. While once the failure of General Motors would have been an unequivocal benefit to Ford, these competitors are today interdependent in a way Alfred Sloan or Henry Ford could not have imagined. The impact of the tsunami on Japanese industry showed how just-in-time inventory management left many companies vulnerable when deliveries were just not in time, even if their operations had not been directly affected by the disaster.