What news on the Rialto?

Blog | 20 September 2017

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I am not long back from Venice where I spent a few days sitting on the terrace of my hotel, sipping prosecco and watching the tourists shuffling on the Rialto bridge taking photos and texting on smartphones.

Inevitably, the phrase "What news on the Rialto" came into my mind. The words are first those of Shylock in The Merchant of Venice [Act 1, Scene 3] but news - market intelligence - and contract negotiations, frustration and fulfilment are the key themes of the play.

Have times changed? Not really. In this issue Susan Ross and Stephen Taylor of Aon Credit and James Esdaile of BPL Global, look at the current state of the credit and political risk insurance (CPRI) market and their observations seem remarkably close to those of 500 years ago.

The merchants of Venice took risks in a way that could be described as Esdaile puts it, "holistic". They were bankers and insurers, traders and wholesalers, retailers
and casualty insurers, and political risk insurers.

Each merchant had their own level of willingness - these days we'd call it risk appetite, capacity or capital availability - to take layers of risk and have a portfolio spread of risk. Ross and Taylor highlight this in the modern world.

Identifying risk also means documenting it. Again, today we'd call it policy
wording. Our contributors, brokers who work with different underwriters and in cooperation with exporters' banks, look at this subject too. I doubt if an own
retention of a pound of flesh would be acceptable in a contract written today.

"Now, what news on the Rialto" [Act 3, Scene 1], the second mention, by Solanio,
reminds us that times change. Esdaile argues for an IT system for the private CPRI market which would complement the Berne Union while keeping confidentiality.

I also had the opportunity to meet TFR subscribers, sponsors and award
winners at our reception for our Excellence in Trade Awards. Congratulations to all
and particularly to Geoffrey Wynne, a master of structured trade, who wins the
TFR Fellowship Award. But a thought lingers - structured trade finance is not our
own invention.

Katharine Morton


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