Comment by fsckboy

> If the bank has too much risk, they can off board it to someone with deeper pockets and a more diversified portfolio

... or especially to somebody who happens to bear the reverse risk.

For example, a wheat farmer doesn't want the risk that wheat prices might collapse by harvest time due to windfall harvests somewhere else in the world; and the spaghetti maker doesn't want the risk that wheat prices might be soaring due to crop failures somewhere else-else. They make a deal now so they don't need to worry about the future, but they don't need to make the deal directly, they can each buy or sell wheat futures.