ABSTRACT
It’s 1,700BC, and you’re a merchant in the busy city of Babylon. You have several rolls of cloth you want to ship 200 miles (320km) down river to the distant town of Ur where there’s a demand for your merchandise.
But what happens if the boat sinks, or is set upon by pirates? Until recently you suffered the loss. But now you can manage your risk. Thanks to the new code of Hammurabi, King of Babylon, there is a new service called ‘insurance’. You can borrow money to buy your cargo. And the lender will cancel your loan if your ship is lost at sea. The Code of Hammurabi is the earliest known form of risk management.
