You are currently not signed in. Any products you have purchased will not be available until you Sign In.
For a personalized walk-through of IRMI Online, Request a Demo.

perfect hedge

An investment vehicle designed to mitigate the financial risk inherent in a portfolio of investments and/or in the normal course of business. Financial risk hedges are usually derivatives designed to counteract the price risk associated with normal business activities, such as the purchase of raw materials. Derivative hedges, however, are usually not perfectly correlated with the risk against which they are supposed to hedge; thus, a degree of risk remains. A perfect hedge, however, correlates perfectly with the risk. When insurance contracts are used to hedge these risks, a perfect hedge is possible due to the fact that insurance is a zero-sum transaction—that is, the contract either pays off or does not pay off based on the policy claims trigger.


More Risk Finance and Captives Information from IRMI
Books, Manuals, Newsletters IRMI
Online
ReferenceConnect
Risk Financing IRMI Online ReferenceConnect
Captive Insurance Company Reports IRMI Online ReferenceConnect
Captive Practices and Procedures IRMI Online ReferenceConnect
Captives and the Management of Risk IRMI Online ReferenceConnect
The Risk Report IRMI Online ReferenceConnect
Free Risk Financing Articles in IRMI.com
25 Risk-Conquering Ideas
Risk Finance
Captive Insurance
Additional Insured Insurance Law
Insurance Continuing Education Courses from IRMI
Ethics Considerations for P&C Insurance Professionals (CE)
Ethics in the P&C Insurance Workplace (CE)

Navigation

Social Media