The difference is that one set of risks is insurable and the other is not.
An insurable risk is one which can be mitigated through diversification. You can insure your house against fire only because there are thousands of other people also insuring their houses against fire. One consequence is that insurance is cheaper than an individual guarantee: it would cost much more to make your specific house entirely fireproof.
The other difference (and that one goes against Cochrane) is that normal insurable risks are survivable (and so you can assign certain economic value / utility / etc. to outcomes) while existential risks are not—the value/utility of the bad outcome is negative infinity.
The difference is that one set of risks is insurable and the other is not.
An insurable risk is one which can be mitigated through diversification. You can insure your house against fire only because there are thousands of other people also insuring their houses against fire. One consequence is that insurance is cheaper than an individual guarantee: it would cost much more to make your specific house entirely fireproof.
The other difference (and that one goes against Cochrane) is that normal insurable risks are survivable (and so you can assign certain economic value / utility / etc. to outcomes) while existential risks are not—the value/utility of the bad outcome is negative infinity.