Attempts to eliminate risk can have risky consequences

A thriving economy needs saving and capital investment. Capital investment is inherently risky because it involves making a judgment about returns from entrepreneurial ventures when our knowledge about the future is always limited. Any saving that leads to capital investment must therefore lead to risk. While risk can be managed and reduced (for example, by diversification), in general it is only possible for a saver to bear less risk if some other party bears more. For example, when we put our money in a bank, the level of risk is very low because the shareholders of the bank take the first hit if borrowers do not repay their loans. However, the extent to which we can offload risk like this is limited and, because all savers are ultimately households, such mechanisms merely switch risk from one household to another.

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Source: http://www.iea.org.uk/blog/attempts-to-eliminate-risk-can-have-risky-consequences

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