Administration CostsThe costs of managing risk such as the budget of a risk management team.
Mitigation CostsThe costs of reducing risk. For example, a firm that buys specialized hardware and software to reduce information security risks.
Risk Control CostsThe cost of operational processes designed to reduce risk such as credit checks that are run on customers.
Transfer CostsThe cost of transferring risk using techniques such as insurance or financial instruments.
LossesLosses that occur because of a risk. For example, losses that occur when a customer fails to pay for delivered services is considered a loss due to credit risk.
|Overview: Cost Of Risk|
|Type||Risk AnalysisRisk Metric|
|Definition||The cost of risk management, risk control, risk mitigation, risk transfer and losses due to risk.|
|Notes||Cost of risk can be forecasted using estimates such as a risk value.|
|Related Concepts||Risk ManagementRisk ControlRisk MitigationRisk TransferRisk AnalysisRisk|