Finance School of Management Risk Transfer and Economic Efficiency Institutional arrangements for the transfer of risk contribute to economic efficiency in two fundamental ways To reallocate existing risks to those most willing to bear the risks To cause a reallocation of resources to production and consumption in accordance with the new distribution of risk-bearing uesTc 1818 Finance School of Management Risk Transfer and Economic Efficiency ❖ Institutional arrangements for the transfer of risk contribute to economic efficiency in two fundamental ways. – To reallocate existing risks to those most willing to bear the risks, – To cause a reallocation of resources to production and consumption in accordance with the new distribution of risk-bearing