From the course: Protecting Profitability by Reducing Financial Risk

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Transferring risk

Transferring risk

From the course: Protecting Profitability by Reducing Financial Risk

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Transferring risk

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- Without transfer of risk, business couldn't exist. Some giant corporation with seemingly endless dollars being willing to pay upwards of tens of millions of dollars if your company messes up and is responsible for injury or damage to someone else saves you from being stuck paying the damages out of your cash flow or, more likely, going out of business. Without transfer of risk, the global economy, from Fortune 500 companies down to the corner cafe, would not be able to operate. While insurance is the most notable way to transfer risk, there are a total of three ways to do it so that a business can most effectively manage theirs. The first is called the additional insured method. This is popular with landlords and tenants. The owner of a commercial building doesn't want to be dragged in to a damaging lawsuit if their tenant is responsible for someone being injured on the property. One of my clients had a situation where a woman had the heel of her shoe get stuck in the…

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