A ruinous risk is destroyed only when it lands on someone it can't ruin

Passing a risk along feels like getting rid of it. It isn't. A loss that [ends the game](Decisions require ergodicity to succeed over time) for whoever holds it is conserved under transfer: hand it off and the world contains exactly as much ruin as before, wearing a different name. The only transfer that destroys the risk is one that lands it somewhere it stops being ruinous.

The Japanese horror film Ringu knows this. Its cursed videotape kills you in seven days unless you copy it and show someone else, so every survivor is a vector and the curse's total stock never drops. The film is honest about what most risk markets are not: peer-to-peer transfer among the equally mortal is transmission, full stop.

Insurance is the one trick that works, and it works because of the recipient, not the handoff. A house fire would end your financial game. To an insurer holding a million uncorrelated policies, your fire is a rounding error it can average away. The ruin doesn't relocate; it dies in transit, because in the new hands it isn't ruin anymore.

2008 was Ringu cosplaying as insurance. Mortgage default risk got sliced, rated, and passed along on the theory it had been diversified out of existence. The tranches landed on leveraged balance sheets the losses could still kill, all at once and correlated. The curse just moved.

Source claim: Transferring a ruinous risk eliminates it only when the recipient cannot be ruined by it; between equally ruinable parties, transfer is just transmission.