A bank SocietyGen insures itself against losses from rogue trader risk by entering into insurance contracts. After entering the insurance contracts, the bank manager chose to be lax in its implementation of trading limits. If a trader exceeds the trading limits and makes large profits, the bank is better off than it would be otherwise. If a large loss results, a claim can be made under the rogue trader insurance policy. This situation is classified as both moral hazard and adverse selection problems faced by the insurance company selling the insurance contracts against rogue traders none of the other options adverse selection problems faced by the insurance company selling the insurance contracts against rogue traders moral hazard problems faced by the insurance company selling the insurance contracts against rogue traders