Definition of "Risk financing"

Kim Adams real estate agent
Kim Adams Remax Elite Realty

Utilization of source (s) of funds to pay for losses. Source (s) of funds can be classified as:

  1. internal a RETENTION program is established to use funds from within the organization to pay for losses.
  2. external a transfer program (generally through the purchase of INSURANCE) is established to use funds from without the organization to pay for losses.
Usually, a RISK MANAGEMENT program combines retention and transfer to form a comprehensive program for loss protection.

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