Tennessee Code Title 9. Public Finances § 9-4-407

(a) The state treasurer is expressly authorized to contract for the safekeeping and servicing of eligible collateral and/or securities owned by the Tennessee consolidated retirement system and/or other securities of which the state treasurer is the custodian.

(b) The state treasurer is expressly authorized, if the state treasurer deems it advisable, to insure securities against theft or other loss.

(c) All expenses incidental to the safekeeping and servicing of securities other than eligible collateral shall be paid by the state agency or the retirement system charged with the responsibility of the securities.

(d) The state of Tennessee shall be liable to the state depository for any loss of eligible collateral arising from embezzlement and/or theft while in the possession of the state treasurer or under the state treasurer's dominion or control under this section. The state of Tennessee is not liable, however, for loss to the state depository from market fluctuations in the value of collateral or loss to such depository while the collateral is in possession of any common carrier in route to or from the state depository to or from the state treasurer.