MANAGEMENT

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: -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.

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: -Common forms of risk transfer include an indemnification clause and a hold harmless agreement. These can work together so that the named party, the contractor in this case, is responsible for any claims or losses that are a result of the work on behalf of the other party.

Detailed explanation-5: -The insurer transfers some or all of an insurance risk to another insurer. The insurer transferring the risk is called the “ceding insurer”. The insurer accepting the risk is called the “assuming insurer” or “reinsurer”.