
240 Operational Risk Control
acquisition expenses to a special purpose vehicle (SPV) which finances the purchase of
these rights. The SPV does so by issuing securities to the capital markets.
In conclusion, catastrophe bonds, options, and swaps have existed for some time,
but until recently they were a small amount compared to contingent capital. As we
saw in Figure 11.3, they grew rapidly in 1997 and 1998 but then tapered off. This is
indeed a complex market and much will be learned about it in the coming years.
Therefore, in the mean time banks planning insurance coverage for operational risks,
as well as insurers and reinsurers, should be very, very ...