Structured finance is a complex financial instrument that helps organizations manage their risks and raise capital. It involves pooling various financial assets, such as loans or mortgages, and then creating securities backed by these assets. This process allows investors to buy shares in a diversified portfolio, which can provide more stable returns compared to individual investments. One common example of structured finance is the creation of collateralized debt obligations (CDOs). These are investment products that bundle different types of debt, allowing investors to choose the level of risk they are comfortable with. By doing so, structured finance can enhance liquidity and improve access to funding for businesses and individuals.