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You'll be able to insure towards quantifiable risks like, fire or theft, however we're talking about non-quantifiable dangers here. This concept that you may “sell risk” would appear absurd outside the unreal world of banking. And it flies against all common sense, and, I might say, even in opposition to nature. The answer? Let a 3rd occasion carry the chance and also you pay them a regular fee for doing this. Imagine you run an organization and, like all firm, you see dangers and dangers to your small business by means of changing markets, new opponents, or no matter. But occurring from that, the follow of banks’ “selling risk” by means of “swaps” is barely made attainable with securitisation. They have to remain as your risks and nobody else’s. Properly, in fact, that is never going to occur. I wrote in a recent PM blog about how securitisation, one of the emblems of this new world of banking, ought to be unlawful as, just for starters, it violates rules of authorized contract.
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