RISCHIO (IN INDUSTRIAL FINANCING). – It merits particular mention insofar as it dominates the basic phenomenon of the economy, namely the formation of saving (v.) and its transformation into productive capital.
With its increasing frequency and severity, it in fact determines the prevalence of consumption for enjoyment over saving consumption; and, within the latter, the preference for speculative investments and for those of short and very short maturity over industrial investments, which are always long-term, but on which the security of employment and the spread of prosperity essentially depend.
Risk in industrial financing has three fundamental aspects: investment risk, that is, the partial or total loss of capital through the collapse of enterprises and radical changes in production systems or consumer tastes; immobilization risk, which prevents the invested capital from being realized without loss when necessary; and devaluation risk, the most feared and most certain, which corrodes capital, so that once disinvested it no longer purchases what it purchased at the time of investment.
It may be said that every advance in economic and financial technique pursues, directly or indirectly, the aim of eliminating or reducing one or another of these risks: relying especially on the insurance-based distribution of risk (savings banks, mortgage and building credit institutions, investment companies, holdings, trustees, and the like), and on the efficiency and flexibility of the securities market (stock exchanges, commodity exchanges, the negotiability of securities). Against devaluation risk, technique knows of no specific remedy, monetary devaluation (v.) is a complex phenomenon that must be countered at its remote causes: unproductive labor, interest (v.) on loans, and monetary disorder.
The numerous and unceasing attempts aimed at eliminating or reducing risk in industrial financing must therefore rely not only on improvements in economic and financial technique, but also on a broad moral commitment embracing the reform of customs, with a view to greater rationality in economic activities and to a more evident and practical economic solidarity among the nations of the world. The order and tranquility that would follow, together with the seriousness of work, would constitute the favorable climate for the maximum formation of savings, most of which could be transformed into new instruments of labor and new wealth for mankind.
BBL.: a genuine bibliography on the subject is lacking. Mario Baronci