risk transfer

A *risk management strategy that involves the moving of a *risk from one individual, activity, or organization to another. Risk transfer can imply the moving of an entire risk elsewhere, but in practice it tends to involve the sharing of risk with another party. *Insurance cover is a classic risk transfer strategy, and it illustrates that risk transfer strategies can be very costly. In 2001, for example, a guerrilla attack on Sri Lanka’s Colombo International Airport destroyed a number of commercial airliners, and antiwar insurance *premiums rocketed by over 300 percent for commercial airlines operating to and from that country. Other potential risk transfer parties include *customers, *suppliers, *agents, and *joint venture partners. A transfer of risk does not imply a transfer of * accountability, as an organization’s management remains responsible for the results of its risk management strategy.