- Risk Transfer is Good!

Councils are transferring risk to third-parties. By

The Guardian reports that some councils have been entering into weather derivatives – so that if we have unseasonably cold weather, they will get a payout to fund extra road gritting; conversely if we have fewer icy nights the councils will need to make a payment. This is all about mitigating budget risk by transferring costs away from the council. Conceptually this is very similar to the risk transfer that is the goal under Payment by Results contracts and for Social Impact Bonds.

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