Exactly. Rather than minimizing variation through the “Gaussian copula formula”, derivatives merely transfer the risk that isn’t properly calculated to another party. It amplifies risk. Time between market failures becomes much more indeterminate and the cause is hard to find.
The crunch come in bankruptcy court. The lawyers who before bankruptcy, were so sure their contracts were properly written find that even they can’t figure them out. They then look to the government for resolution to shortcut the legal battles.