‘The zone of essen­tial risk’ is a term coined by Bob Blakely to describe the prob­lem with rare, medium-sized trans­ac­tions:

If you con­duct infre­quent trans­ac­tions which are also small, you’ll never lose much money and it’s not worth it to try to pro­tect your­self — you’ll some­times get scammed, but you’ll have no trou­ble afford­ing the losses.

If you con­duct large trans­ac­tions, regard­less of fre­quency, each trans­ac­tion is big enough that it makes sense to insure the trans­ac­tions or pay an escrow agent. You’ll have occa­sional expe­ri­ences of fraud, but you’ll be reim­bursed by the insurer or the trans­ac­tions will be reversed by the escrow agent and you don’t lose anything.

If you con­duct small or medium-sized trans­ac­tions fre­quently, you can amor­tize fraud losses using the gains from your other trans­ac­tions. This is how casi­nos work; they some­times lose a hand, but they make it up in the volume.

But if you con­duct medium-sized trans­ac­tions rarely, you’re in trou­ble. The trans­ac­tions are big enough so that you care about losses, you don’t have enough trans­ac­tion vol­ume to amor­tize those losses, and the cost of insur­ance or escrow is high enough com­pared to the value of your trans­ac­tions that it doesn’t make eco­nomic sense to pro­tect yourself.

via Schneier