Risk securitization

{
  "id": "MLC-T-INS-002988",
  "term": "Risk securitization",
  "field": "Insurance and risk management",
  "definition": "The process of transforming underwriting risks into tradable financial instruments that are sold to capital market investors. A special purpose vehicle issues securities, such as catastrophe bonds, whose repayment is contingent on a specific risk event not occurring. Investors receive coupon payments for assuming the risk, but they can lose their principal if the trigger event happens, with the funds then used to cover the insurer's losses.",
  "url": "https://mlchart.com/terminology/insurance/risk-securitization/"
}