Failures of risk management by large institutions, or by a sufficient number of smaller ones, would threaten not only the solvency of the institutions themselves but also the health of the whole system. Of course, in some respects financial innovation makes risk management easier. Risk can now be sliced and diced, moved off the balance sheet, and hedged by derivative instruments.
Indeed, the need for better risk sharing and risk management has been a primary driving force behind the recent  2  BIS Review 49/2007  wave of innovation. But in some respects, new instruments and trading strategies make risk measurement and management more difficult.