Who's buying?

Operational risk derivatives are being reconsidered as a solution to banks' distrust of op risk insurance policies, but the market for these is yet to develop. By Duncan Wood

Here's a conundrum: banks don't like the insurance policies that are available to cover operational risk, and yet they keep buying them. Why? Largely, it's because of a scarcity of viable alternatives – and this scarcity is now helping to revive interest in the long-mooted but little-explored idea of op risk derivatives.

Gripes with current insurance policies range from their myriad exclusions (for example, many business interruption policies won't pay out unless the insured suffers property

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