Derivatives are sometimes seen as introducing risk to our economic system, which is ironic, because the intent and effect of derivatives is the exact opposite: to help businesses reduce their operating risk.
The International Swaps and Derivatives Association engaged us to educate general audiences on the function of derivatives in the modern economy, and help dispel some common misperceptions. As we often do, we created a fictional company to help demonstrate the kind of use cases these financial instruments have. And as we often do, we used metaphors to help illuminate concepts.
The end product is a compact and elegant explanation which we’re quite proud of!
