A risk that strikes a large number of insureds simultaneously and escapes mutualisation, as opposed to particular risk.
Fundamental risk designates, in insurance theory, a risk that strikes a very large number of insureds at the same time and destroys entire classes of assets, as opposed to particular risk, which affects an isolated individual without touching others. An isolated fire is a particular risk, perfectly mutualisable; a war, a pandemic or a systemic crisis are fundamental risks. Their correlated, catastrophic and non-diversifiable character makes them structurally difficult to insure, because no premium can finance a massive accumulation of simultaneous losses. War is the archetype, which is why its exclusion is the oldest and most stable in insurance contracts. In the face of such risks, the private market reaches its limit and the burden is often referred to public last-resort schemes.
A systemic cyber-attack on a major payments system, liable to cost several thousand billion dollars, presents the profile of a fundamental risk that private mutualisation cannot absorb.
risque catastrophique corrélé, fundamental risk