George Soros States the Obvious.

It's called asymmetrical risk and it's the reason AIG is now a ward of the State.

Of course, in AIG's case, it seems likely that assuming so much asymmetrical risk was the strategy all along. The idea being that the fees generated from underwriting vast amounts of CDS would generate vast bonuses. And when it all blew up, as the AIG Team surely knew it would, they could then fob the whole mess off onto the US taxpayer. Which is, of course, exactly what they did.