Prediction markets and hedging, with Herisson co-founder Will Brooke

Prediction markets are being pitched as business risk tools, not just trading products. Herisson co-founder Will Brooke told host Dustin Gouker that the three-month-old, VC-backed company, based in New York and Paris, helps small and medium-sized businesses hedge risk through prediction markets using event contracts.

In this episode

• Brooke says 77% of small businesses are underinsured, and around half of that group are underinsured because they cannot afford premiums (23:03, 25:32).

• He argues event contracts resolve in 48 hours against a third-party oracle, while traditional insurance can take months to pay out (26:32).

• Herisson works more like an introducing broker, he says, with institutional market makers willing to price contracts five to 10 times faster than a specialty insurer (27:26).

• Examples include weather exposure for ski resorts and tourism operators, employee reclassification risk on payroll, and supply chain exposure for consumer brands (34:35).

• Gouker warns there will be growing pains when someone did not think about how a contract was written; Brooke agrees and hopes buyers check that the oracle maps to their company's basis risk (30:34).

• Brooke would be surprised if, a couple of decades out, this is not as large as the specialty insurance market, but he does not think it will wipe out insurers (43:26).

Episode from The Event Horizon Podcast by Dustin Gouker, published on YouTube.