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, who 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. © 2014 Published by Elsevier B.V.
Selmier, W. T., Penikas, H., & Vasilyeva, K. (2014). Financial risk as a good. In Procedia Computer Science (Vol. 31, pp. 115–123). Elsevier B.V. https://doi.org/10.1016/j.procs.2014.05.251