Unlike their arch rival, Bag-o-Glass sold exclusively to preschoolers. Bag-o-Marbles decided that they did not need to insure against injuries to kids using its product. They decided to accept risk in their business, and this financial bet is an element of risk management. Bag-o-Marbles did the math on the $10 million a year their insurance company wanted to insure for injuries sustained by kids putting marbles in, um, wrong places...and it was just too much money. They'd rather self-insure, and hope that business continues to roll.
Related or Semi-related Video
Finance: What is Counterparty Risk?9 Views
Finance a la shmoop what is counterparty risk?
alright here's you the party and here's the guy you're contracting with to sell [Woman and man stood side by side]
18 tons of bricks or buy a line of credit for your flower shop or sell a
futures contract with the right to buy oil at 80 bucks a barrel for the next [Person signs contract]
two years so you're the party and he's the counterparty and the yin and yang of
the party and here's the risk yeah well the counterparty risk is just
that the person you contracted with doesn't live up to their end of the
bargain you pay them good money you sign a good contract all lawyered up and [Stack of money and contract appears]
stuff and then they split like totally split disappeared sea men choose the
bottom of the ocean maybe they went to Bora Bora
maybe they got facial surgery in the Philippines you know they do that now [George Clooney in a surgical bed]
well when that happens you will probably feel like crying and you should its your
counterparty you can cry if you want to come on that was a good reference people [Man singing]
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