We assess the aggregate importance of derivatives for nonfinancial firms. Using a contract-level dataset, we document that derivatives provide large amounts of insurance. The net risk transfer to the financial sector is small due to offsetting exposures across firms. Hedging reduces cashflow variance, with benefits concentrated among top users. A factor model shows that most cashflow risk cannot be hedged, though top users again hedge significant factor exposures. We sketch an equilibrium model where firms face cost risk and have pricing power. The model predicts that a firm’s cashflow risk depends on average industry exposure and how rivals pass their own cost shocks to consumers.