Definition of Risk financing:
Money consumed in losses, funded either from internal reserves or from purchase of insurance.
Risk financing is designed to help a business align its desire to take on new risks to grow, with its ability to pay for those risks. Businesses must weigh the potential costs of their actions and whether the action will help the business reach its objectives. The business will examine its priorities to determine whether it is taking on the appropriate amount of risk to achieve its objectives. It'll also examine whether it is taking the right types of risks and whether the costs of these risks are being accounted for financially.
Risk financing is the determination of how an organization will pay for loss events in the most effective and least costly way possible. Risk financing involves the identification of risks, determining how to finance the risk, and monitoring the effectiveness of the financing technique that is chosen.
How to use Risk financing in a sentence?
- We had to implement some risk financing procedures to help us out, cause we really needed it right now for our company.
- The risk financing arm of our team was concerned with insurance but we were able to alleviate their concerns entirely.
- Unfortuantely the risk financing amounted to more than they expected. By the time they added the losses and cost of insurance, it was a a large part of their budget.
Meaning of Risk financing & Risk financing Definition