What does Securitization of Risk mean? Read on to discover the definition & meaning of the term Securitization of Risk - to help you better understand the language used in insurance policies.
Securitization of Risk
The practice of converting known potential risk scenarios, such as the potential for a hurricane, into a marketable security. The best example to date is the "cat bond," a bond future (commodity) traded on the Chicago Board of Trade (CBOT).
More Insurance Terms And Definitions
The Merriam-Webster Dictionary defines insurance as:
b: Coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.
c: The sum for which something is insured.
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