InsuranceAn insurance policy transfers a specific set of risks such as the fire and flood risk for a particular asset.
DerivativesA derivative is a financial product that derives its value from the value of an underlying entity such as an asset or interest rate. They are often purchased by businesses as a hedge against financial risks such as exchange rate risk.
ServicesIn many cases, services shift risks towards the vendor offering the service. For example, an email app that deals with technology, facility, capacity and cybersecurity risks to deliver a service that customers use without worrying about these things.
OutsourcingOutsourcing a project or process typically transfers a variety of risks to a partner. Such transfers are specified in contract terms. For example, penalties may be put in place that are triggered if a project or process doesn't meet a set of minimum requirements.
FreelancingIn many cases, freelancing jobs on a fixed price contract shift risks to the worker from the firm. For example, if a software development freelancer accepts a flat-rate for a project then they will absorb the risk that the project is more work and runs longer than expected.
Gig EconomyGig economy workers common absorb risks that were historically taken by employers. For example, if a language teacher only gets paid for the lessons they teach, they absorb the risk that students don't show up to a scheduled class.
|Overview: Risk Transfer
A contractual agreement that transfers risk to a third party.