First, index funds are not strictly speaking, passive. An index is chosen by people (like thos who work at Standard and Poors). They have some rules, but always a human element too. The "management" of indexes is the same as the management of actively managed funds except that the latter make changes to their portfolio (index) whenever they want. In short, the difference between passive and actively managed funds is one of degree, not kind.

Systemic risk has nothing to do with performance. Investing is full of these sloppy concepts. Investments do well when people want the securities. Risk is generally just a measure of historical volatility. It can, and does, change each day. Past volatility is not guarantee of future volatility.

An investor neither wants high or low volatility. They want the security to increase in price, Better to have high volatility rising than low volatility doing nothing. If risk is about anything, it's about not being caught short if you want to sell on any given day. It has NOTHING to do with the entire market going up.