ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Risk transfer refers to a risk management technique in which risk is transferred to a third party. In other words, risk transfer involves one party assuming the liabilities of another party. Purchasing insurance is a common example of transferring risk from an individual or entity to an insurance company.

Detailed explanation-2: -Risk transfer is a risk management and control strategy that involves the contractual shifting of a pure risk from one party to another. One example is the purchase of an insurance policy, by which a specified risk of loss is passed from the policyholder to the insurer.

Detailed explanation-3: -Risk transfer can be of mainly three types, namely, Insurance, Derivatives, and Outsourcing.

Detailed explanation-4: -Transferring risk means that one party assumes the general liabilities of another party. One example of risk transfer is purchasing insurance.

Detailed explanation-5: -Insurance is risk transfer through risk pooling.