Strategic Risk Financing
Definition of "Strategic risk financing"
Elimination of unnecessary financing costs and the redirection of those sums to activities that are more profitable. The concept is for the company to have a long-term view of its risk exposure as opposed to concentrating on the availability of insurance at any time. For example, in a soft market, companies tend to buy more insurance than they need because premiums are low. In a hard market, companies tend to retain their insurance coverage regardless of price. The methodology involves a cost/benefit analysis of the numerous risk retention options to discern the difference in the cost of a retention option and that of full/partial insurance for that option. In the analysis of each option, the company's past loss experience is examined and maximum possible loss scenarios in the future are projected. After the statistical studies are completed, a program is designed to provide an effective plan of risk coverage at an efficient price.
Popular Insurance Terms
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Based on historical loss experience, from which future loss experience is predicted. ...
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Arbitrator who settles disputes over the amount of loss when an insurer and an insured do not agree. ...
Estate under the legal and administrative guidance of both the surety and the fiduciary. Any actions on the part of the estate requires the signatures of both in order to reduce the chances ...
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