Financial institutions have “risk managers,” whose job is, in essence, to worry about such matters as we’ve been discussing. A risk manager assesses the risk to an institution’s portfolio or portfolios, assigns the appropriate number, and (to the extent his organization allows) does generally try to mitigate it. Speaking a bit roughly, there are four things to do about any given risk: avoid it, mitigate it, transfer it, retain it. If a risk manager persuades his superiors that a particular proposed merger comes with a lot of risk, because a “due diligence” review shows the potential target company has a lot of off-balance-sheet liabilities, then he may scuttle the merger entirely. Mission accomplished. If he can’t scuttle the merger, he can at least suggest ways in which the risks of the merger may be reduced, by for example making it a condition of any deal that the target entity spin off its more troublesome subsidiaries first. When it can be neither avoided nor re...