How 12th-century Genoese merchants invented the idea of risk

The word “risk” traces its roots to the Arabic “al-rizq”, but it was Genoese sailors that gave it the meaning we know today. Because canon law banned the payment of interest on loans, sailors had to find another way to entice investors to shoulder part of their journey’s expenses. Called “resicum” (and later, “risk”), this new approach allowed investors to finance a captain’s trip in exchange for a promise of 75% of the journey’s potential profits; a high reward that rationalised the risk the investors undertook by funding the trip. Read full article here

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