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6 Types of Risk Transfer

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Risk transfer is the assignment of a risk to a third party using a legal agreement. The following are common examples:


An insurance policy transfers a specific set of risks such as the fire and flood risk for a particular asset.


A 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.


In 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.


Outsourcing 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.


In 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 Economy

Gig 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.
Risk Treatments

Project Management

This is the complete list of articles we have written about project management.
Acceptance Criteria
Acceptance Testing
Actual Cost
Basis Of Estimate
Behavioral Requirements
Burndown Chart
Change Control
Change Control Board
Change Fatigue
Change Request
Concept Note
Cone Of Uncertainty
Corrective Action
Cost Baseline
Cost Contingency
Cost Control
Cost Overrun
Cost Variance
Defect Density
Definition Of Done
Document Control
Earned Value
Estimate At Completion
Estimate To Complete
Feasibility Analysis
Fudge Factor
Full-Time Equivalent
Human Factors
Issue Management
Lead Time
Lessons Learned
Level Of Effort
Opportunity Study
Out Of Scope
Parametric Estimate
Phased Implementation
Planned Value
Program Management
Project Charter
Project Communication
Project Complexity
Project Concept
Project Controls
Project Failure
Project Goals
Project Management
Project Metrics
Project Planning
Project Productivity
Project Proposal
Project Risk
Regression Testing
Requirements Quality
Return On Investment
Risk Register
Schedule Baseline
Schedule Chicken
Scope Baseline
Scope Creep
Set Up To Fail
Smoke Testing
Stakeholder Management
Statement Of Work
Story Points
Use Case
User Stories
Variance Analysis
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Project Risk

A list of common project risks.

Project Management Basics

A list of basic project management techniques.


A definition of workaround with examples.

Project Branding

A list of project branding techniques.

Stakeholder Management

An overview of project stakeholder management with examples.

Action Plan

A definition of action plan with examples.

Cost Overrun

The primary types of cost overrun.

Document Control

The definition of document control with examples.

Project Oversight

A guide to project oversight.

Design-Driven Development

A definition of design driven development with examples.

Project Risk

A list of common project risks.

Project Stakeholder

A list of common project stakeholders.

Business Risks

A list of common business risks.

Risk vs Issue

The difference between a risk and an issue.

Risk Treatment

The five things that can be done about risk.

Secondary Risk

The definition of secondary risk with examples.

Risk Register

A guide to creating a risk register with an example.

Risk Perception

A definition of risk perception with examples.


The common types of implementation.

Project Risk Management

A reasonably complete guide to project risk management.
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