Transferable risk: Difference between revisions
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imported>Doug Williamson (Create the page. Source: MCT reading 4.1.3, p12, 01 March 2012.) |
imported>Doug Williamson (Link with Committed risk and Uncommitted risk pages) |
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== See also == | == See also == | ||
*[[Non-transferable risk]] | * [[Committed risk]] | ||
* [[Non-transferable risk]] | |||
* [[Uncommitted risk]] | |||
Revision as of 12:08, 20 May 2015
Risk can usefully be defined as transferable and non-transferable.
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.
