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Concepts  Risk

A Liability is created when an asset you use or are dependent on is owed to or owned by someone else. Risk is the monetized determination of the exposure a business carries. Every claim that could be made on the business composes part of the risk a business is subject to. If a business fails to meet its obligations it is seized, its assets forfeited and it becomes equity in the protfolio of its creditors. This liquidates the debt and turns the liability into capital belonging to someone else.

To forstall this kind of action and lessen risk many businesses raise capital by trading equity for liquidity. Part of the business is sold to raise capital. The creditor takes an equity position in the business.

This lowers the risk created by large amounts of debt but it does not address the full gamut of risks that a business faces. By utilizing a modern or rational form of Barter Rational Exchange eliminates virtually all risk of business failure. This is why only Rational Exchange can guarantee to eliminate poverty, unemployment and pollution.

There are only two ways to do business. A person or small group of persons can assume all the risk. This may create various liabilities. Investors are at risk of losing their investment depending on the liabilities the company has. Liabilities are claims on the business that take precedence over the owners capital and the businesses financial needs and often place such a burdan on the business that it is forced into receivership.

Risk often prevents many people from going into business and makes a mockery of many government initiatives to encourage greater business investment. When the risks are too great people will not expose their capital to potential loss. Pooling assets is a way for people to form a business without acquiring liabilities.

We all have skills and abilities. These have value and can contribute to the formation of a Rational Event. By pooling assets to create sufficient equity to hold an Event we equitize waste or what was not formally of use. Assets are sold to the corporation or Event for equity that is for shares in the Event. Members are hired by the corporation. Members purchase product from the corporation by liquidting their equity position.

 

risk pages