Pakistan Journal of Social Sciences (PJSS) Vol. 32, No. 1 (2012), pp.113-121 A Cybernetic Framework to Deal with Global Financial Crisis: An application of viable system model Muhammad Abdul Majid Makki Assistant Professor, Commerce Department, The Islamia University of Bahawalpur, Pakistan. Email: abdul7896@yahoo.com.au Suleman Aziz Lodhi Associate Professor, National College of Business Administration & Economics Lahore, Pakistan Email: sulemanlodhi@yahoo.com Muhammad Javaid Iqbal Assistant Professor, Commerce Department, The Islamia University of Bahawalpur, Pakistan Email: javaid.iqbal@iub.edu.pk Abstract This paper analyzes the current financial crisis 2008-09 theoretically and attempts to propose cybernetic framework based on viable system model (VSM) principles to design more efficient financial system in global interdependent environment so as to avoid future financial system crisis. After a comprehensive literature review, Stafford Beer's VSM approach has been applied to develop a five step design for proactive diagnosis of systemic risks and to ensure the confidence of all the stakeholders in a highly sensitive and interdependent global financial market. There is a considerable scope for further research on this conceptual framework in creating viable financial system for professional finance experts and the business world in general to moderate the financial echoes and ethos of all the stakeholders and regulating agencies for sound financial system. The sound financial system brings sustained prosperity through strong economies with exogenous impact on the budding economies. This paper observes the need to oversee the full spectrum of current global financial crisis so as to offer a comprehensive VSM based framework to avoid future financial system crisis. Keywords: Cybernetics; Viable System Model; Financial System; Global Financial Crisis I. Introduction Financial system crisis 2008-09 in the advanced economies has exposed some glitches in the world financial system. One of the important deficiencies in global financial system is the lack of control over innovative financial derivative products developed through financial engineering. This control on innovative products in the overall financial system can be dealt through cybernetic principles, which claim that there are underlying laws which control the overall working of the system automatically; the