Risk transfer typically involves paying an insurance premium in exchange for protection from substantial financial losses. For example, property insurance protects companies from costs incurred due to damaged buildings, while professionals can purchase errors and omissions insurance to protect against lawsuits from clients claiming poor advice. The insurance company accepts ownership and impact of the risk in exchange for a risk premium payment. While risk transfer does not eliminate risk, it reduces the direct financial impact on the project or company.

1. Risk Transfer
Risk transfer typically takes place by paying a premium to an insurance
company in exchange for protection against substantial financial loss.
For example, property insurance can be used to protect a company
from the costs incurred when a building or other facility is damaged.
Similarly, professionals in the financial services industry can purchase
errors and omissions insurance to protect them from lawsuits brought
by customers or clients claiming they received poor or erroneous
advice.

2. The third-party, like insurance company or vendor, is paid to
accept or handle the risk on your behalf and hence the
ownership, as well as impact of the risk, is borne by that third
party. This payment is called a risk premium. Contracts are
signed to transfer the liability of risks to the third party.
•
Risk Transfer does not eliminate the risk, but it reduces the
direct impact of the risk on the project. Few Transference tools
are an insurance policy, performance bonds, warranties,
guarantees, etc. This approach is most effective in covering
financial risk exposure.

3. Risk Management
In business, the forecasting and evaluation of financial risks
together with the identification of procedures to avoid or minimize
their impact.
Every business faces risk that could present threats to its
success. Risk is defined as the probability of an event and its
consequences.
Risk management focuses on identifying what could go wrong,
evaluating which risks should be dealt with and implementing
strategies to deal with those risks.
Risk management is important in an organization because
without it, a firm cannot possibly define its objectives for the
future.

4. The whole goal of risk management is to make sure that the
company only takes the risks that will help it achieve its primary
objectives while keeping all other risks under control.

5. Example of Marketing Risk and Corresponding Risk
Management

6. Risk Protection
Insurance will not reduce your business' risks but you can use it
as a financial tool to protect against losses associated with some
risks. This means that in the event of a loss you will have some
financial compensation. This can be crucial for your business'
survival in the event of, say, a fire which destroys a factory.
Some costs are uninsurable, such as the damage to a company's
reputation. On the other hand, in some areas, insurance is
mandatory.

7. You may also want to consider:
* products liability insurance
* key man insurance
*group life assurance
Liability Insurance - public and products liability insurance - is
designed to pay any compensation and legal costs that arise
from negligence or breach of duty.

8. Key man insurance is designed to cover you for the financial
costs of losing key personnel.
Group life assurance is provided by employers as part of a
benefits package and pays out a lump sum to an employee's
family should the employee die.
Reference: Original Risk Management Reference:
https://www.infoentrepreneurs.org/en/guides/manage-
risk/#2https://www.simplilearn.com/risk-management-strategies-
article
https://www.business2community.com/marketing/go-wrong-
protect-marketing-risk-01133907

9. Thank you!