Risk Management - Buyer Beware!

There are certain aspects of the world of finance, and more particularly of the world of loans, that seem obvious if only to the non-professional. For example, any time you lend money, to anyone, there is some risk that you might not get it back. With the possible exception of full faith and credit debts of the United States, every loan carries some risk with it regardless of the borrower, and this risk varies depending on the creditworthiness of the person or institution that is supposed to repay the debt. Bearing that risk requires some sort of capital, both as a legal requirement and as evidence of good sense in lending, but recently we seem to have forgotten the basic relationship between a loan and the capital associated with it.