GENERAL KNOWLEDGE

Detailed explanation-1: -Risk transfer is a common risk management technique where the potential loss from an adverse outcome faced by an individual or entity is shifted to a third party. To compensate the third party for bearing the risk, the individual or entity will generally provide the third party with periodic payments.

Detailed explanation-2: -Risk transfer can be of mainly three types, namely, Insurance, Derivatives, and Outsourcing.

Detailed explanation-3: -Contractual risk transfer is the use of contractual obligations to pass on a potential risk to another party. The transfer can be done with indemnity and exculpatory agreements, waivers of subrogation, and contractual requirements to obtain insurance coverage for specific risks.