BusinessPhoto: HT WorldInsurance Challenges in AI and Credit-Default Swaps Explained
In 1912, Franz Reichelt died testing his parachute suit from the Eiffel Tower. Similarly, credit-default swaps (CDSs), a type of insurance against borrower default, face uncertainty. CDSs, used for hedging or speculation, gained notoriety during the 2007-09 financial crisis and euro-zone debt crisis. Failures in triggering payouts, like Greece in 2011 and Banco Espirito Santo in 2014, caused investor losses and shaken confidence in CDS protection.
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