Transferable risk - Revision history

imported>Doug Williamson: Layout.

2020-05-20T22:42:58Z

Layout.

← Older revision		Revision as of 22:42, 20 May 2020
Line 1:		Line 1:
			''Risk management.''

	Risks can usefully be classified as 'transferable' or 'non-transferable'.		Risks can usefully be classified as 'transferable' or 'non-transferable'.

	Transferable risks are those which can be transferred to ~~someone else~~, at a price.		Transferable risks are those which can be transferred to another organisation or person, at a price.


	Ways of transferring these risks include hedging with risk management products, or ~~passing the risk to an insurer~~.		Ways of transferring these risks include hedging with risk management products, or buying insurance.

	In these ways and others, we can remove transferable risks from our organisation, if we choose to.		In these ways and others, we can remove many transferable risks from our organisation, if we choose to.

	However, risks can only be transferred where there is a market for them and not all risks are transferable.		However, risks can only be transferred where there is a market for them, and not all risks are transferable.


Line 17:		Line 19:
	:The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.		:The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.

	:The exporter can eliminate this risk by entering into a forward foreign exchange contract with a bank, effectively fixing the domestic currency equivalent of the receipt. What was initially the exporter's foreign exchange risk has now become the bank's risk.		:The exporter can eliminate this risk by entering into a forward foreign exchange contract with a bank, effectively fixing the domestic currency equivalent of the receipt.

			:What was initially the exporter's foreign exchange risk has now become the bank's risk.

imported>Doug Williamson: Add qualification to risk transfer.

2020-05-20T16:06:36Z

Add qualification to risk transfer.

← Older revision		Revision as of 16:06, 20 May 2020
Line 7:		Line 7:

	In these ways and others, we can remove transferable risks from our organisation, if we choose to.		In these ways and others, we can remove transferable risks from our organisation, if we choose to.

			However, risks can only be transferred where there is a market for them and not all risks are transferable.


	<b>Example</b>		:<span style="color:#4B0082">'''''Example: Transferable risk'''''</span>

	An exporter sells to a customer in another country, in foreign currency.		:An exporter sells to a customer in another country, in foreign currency.

	The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.		:The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.

	The exporter can eliminate this risk by entering into a forward foreign exchange contract with a bank, effectively fixing the domestic currency equivalent of the receipt. What was initially the exporter's foreign exchange risk has now become the bank's risk.		:The exporter can eliminate this risk by entering into a forward foreign exchange contract with a bank, effectively fixing the domestic currency equivalent of the receipt. What was initially the exporter's foreign exchange risk has now become the bank's risk.


	Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk transferred to it.		:Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk transferred to it.

imported>Doug Williamson: Correct spelling.

2020-04-28T13:59:43Z

Correct spelling.

← Older revision		Revision as of 13:59, 28 April 2020
Line 11:		Line 11:
	<b>Example</b>		<b>Example</b>

	An exporter sells to an customer in another country, in foreign currency.		An exporter sells to a customer in another country, in foreign currency.

	The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.		The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.

imported>Doug Williamson: Add link.

2020-04-19T17:48:30Z

Add link.

← Older revision		Revision as of 17:48, 19 April 2020
Line 24:		Line 24:
	* [[Committed risk]]		* [[Committed risk]]
	* [[Non-transferable risk]]		* [[Non-transferable risk]]
			* [[Risk management]]
	* [[Uncommitted risk]]		* [[Uncommitted risk]]

	[[Category:Financial_risk_management]]		[[Category:Financial_risk_management]]

imported>Doug Williamson: Categorise.

2018-02-28T16:39:22Z

Categorise.

← Older revision		Revision as of 16:39, 28 February 2018
Line 25:		Line 25:
	* [[Non-transferable risk]]		* [[Non-transferable risk]]
	* [[Uncommitted risk]]		* [[Uncommitted risk]]

			[[Category:Financial_risk_management]]

imported>Doug Williamson: Expand.

2016-04-25T20:17:35Z

Expand.

← Older revision		Revision as of 20:17, 25 April 2016
Line 18:		Line 18:


	Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk.		Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk transferred to it.

imported>Doug Williamson: comma

2015-08-05T09:21:43Z

comma

← Older revision		Revision as of 09:21, 5 August 2015
Line 11:		Line 11:
	<b>Example</b>		<b>Example</b>

	An exporter sells to an customer in another country in foreign currency.		An exporter sells to an customer in another country, in foreign currency.

	The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.		The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.

imported>Doug Williamson: Replaced 'overseas' with 'another country' to broaden scope

2015-08-05T09:13:43Z

Replaced 'overseas' with 'another country' to broaden scope

← Older revision		Revision as of 09:13, 5 August 2015
Line 11:		Line 11:
	<b>Example</b>		<b>Example</b>

	An exporter sells to an ~~overseas~~ customer in foreign currency.		An exporter sells to an customer in another country in foreign currency.

	The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.		The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.
Line 19:		Line 19:

	Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk.		Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk.

imported>Doug Williamson: Generalise to cover organisations, including not-for-profits, and give fuller example.

2015-05-30T09:07:16Z

Generalise to cover organisations, including not-for-profits, and give fuller example.

← Older revision		Revision as of 09:07, 30 May 2015
Line 1:		Line 1:
	~~Risk~~ can usefully be ~~defined~~ as transferable ~~and~~ non-transferable.		Risks can usefully be classified as 'transferable' or 'non-transferable'.

			Transferable risks are those which can be transferred to someone else, at a price.

	Transferable risks are those which can be transferred to someone else, e.g. hedged with risk management products, or passed to an insurer. In this way you can export transferable risks out of your firm (for a price).

	~~An example~~ of ~~a transferable~~ risk ~~is a foreign exchange exposure~~.		Ways of transferring these risks include hedging with risk management products, or passing the risk to an insurer.

	~~A firm~~ can ~~eliminate this risk by entering into a foreign exchange transaction with a bank~~, ~~thus fixing the rate; what was the firm’s risk now becomes the bank's risk~~.		In these ways and others, we can remove transferable risks from our organisation, if we choose to.


	Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the ~~related~~ risk.		<b>Example</b>

			An exporter sells to an overseas customer in foreign currency.

			The exporter has a transferable foreign exchange risk on the domestic currency equivalent of the future sales receipt.

			The exporter can eliminate this risk by entering into a forward foreign exchange contract with a bank, effectively fixing the domestic currency equivalent of the receipt. What was initially the exporter's foreign exchange risk has now become the bank's risk.


			Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the risk.

imported>Doug Williamson: Note that the bank will price the transaction to earn a profit.

2015-05-21T14:17:29Z

Note that the bank will price the transaction to earn a profit.

← Older revision		Revision as of 14:17, 21 May 2015
Line 4:		Line 4:
	Transferable risks are those which can be transferred to someone else, e.g. hedged with risk management products, or passed to an insurer. In this way you can export transferable risks out of your firm (for a price).		Transferable risks are those which can be transferred to someone else, e.g. hedged with risk management products, or passed to an insurer. In this way you can export transferable risks out of your firm (for a price).

	An example of a transferable risk is a foreign exchange exposure. A firm can eliminate this risk by entering into a foreign exchange transaction with a bank, thus fixing the rate; what was the firm’s risk now becomes the bank's risk.		An example of a transferable risk is a foreign exchange exposure.

			A firm can eliminate this risk by entering into a foreign exchange transaction with a bank, thus fixing the rate; what was the firm’s risk now becomes the bank's risk.

			Naturally the bank will price the foreign exchange transaction so that it earns an appropriate reward for accepting and managing the related risk.