MANAGEMENT

Detailed explanation-1: -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-2: -Methods of Risk Transfer As outlined above, purchasing insurance is a common method of transferring risk. When an individual or entity is purchasing insurance, they are shifting financial risks to the insurance company. Insurance companies typically charge a fee – an insurance premium – for accepting such risks.

Detailed explanation-3: -Risk shifting is the transfer of risk(s) from one party to another party. Risk shifting can take on many forms, from purchasing an insurance policy to hedging investment positions to corporations moving from defined-benefit pensions to defined-contribution retirement plans like 401(k)s.

Detailed explanation-4: -Insurance is another example of risk prevention that is outsourced to a third party by contract. Loss reduction accepts the risk and seeks to limit losses when a threat occurs.

Detailed explanation-5: -The most common way to transfer risk is through an insurance policy, where the insurance carrier assumes the defined risks for the policyholder in exchange for a fee, or insurance premium, and will cover the costs for worker injuries and property damage.