The risk cannot be made to reduce but it can be made to change direction. Since the rate of interest measures the risk now in the futures, thus having a probable trend (at the discount rate), the risk can be programmed to yield into the futures now. By determining its direction the risk can be avoided but not actually reduced.
Risk, then, mathematically expressed, has an absolute value. Whether you encounter the risk is a relative value, though, depending on which way you are moving, occupying space over time. If, for example, the risk is moving to the left but you are also moving left at a higher rate, the risk appears to be moving to the right. In order to know the real direction you have to slow down and measure the change. Then you know the absolute value: the rate of change is never zero (but exists in the futures at the discount rate).
Currently, with the cost of money at nearly zero (tending to a negative rate), the political risk is going gamma, measuring the absolute value of the risk, going forward, in all the futures now.
The risk is hardly zero. Absolutely valued (with the loss fully assumed in priority, discounted at the current rate of return, which is its retributive value), the risk is so high that money is being parked at negative rates to conserve it.
(Remember, again, this is like paying interest to yourself. So, to avoid doing that, the Fed prints money and pays interest to TBTF banks who hold money in reserve, having earned it, lending into larceny in late order, having confiscated property in the form of producing toxic assets, conforming to the law–the GLBA and the CFTMA.)
Funny how the dollar is stronger at negative rates; not so funny when the call is for raising rates against a deflationary trend.
The margin call on toxic, reserve assets is emerging at a negative rate and the political risk is likely to move left because [with absolute value] economic value is being consolidated at higher and higher velocity (discounted) to the right (at the negative rate).
“It’s not the fall that kills you, it’s the sudden stop at the end.”
VOTE FOR SANDERS!