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Article

Financial Risk as a Good

Procedia Computer Science. 2014. Vol. 31. P. 115-123.
Selmier W. T., Penikas H. I., Vasilyeva K.

This paper aims to present an alternative paradigm  of financial risk  to mitigate future financial crises. We argue that risk is not simply a feature of a financial product but a good in and of itself. Examining financial risk, we argue that it is most accurately typed as a common pool (particularly systemic risk) and so another approach to financial risk pricing is needed. We outline the basics of an ex-ante quasi-insurance fund to price financial risk. For more effective governance, risk-loving agents need to contribute to an ex-ante quasi-insurance fund. Insurance recipients would be risk-averse agents, wo do not contribute, as they are forced to participate in systemic risk-taking against their preferences. Our approach to financial risk combines a microprudential regulatory framework with macroprudential supervision.