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.
Notably, risk-management challenges are associated with the complexity of contemporary instruments and trading strategies; the potential for market illiquidity to magnify the riskiness of those instruments and strategies; and the greater leverage that their use can entail. Complexity – especially when combined with illiquidity – amplifies the difficulty of measuring risk, both market risk and counterparty credit risk.