What is an alternative risk transfer?
, also known as Art, is an alternative risk transfer by means of a risk or potential of loss, which is accepted by different types of subjects by transferring part of this risk to another entity. Alternative risk transmission is to some extent somewhat as the use of traditional insurance or security methods, although these risk management tools are usually considered outside the scope of art. For this reason, in addition to traditional insurance, methods and strategies that fall into this category are often used as a means of protecting the insured party from financial loss.
The concept of alternative risk transmission began to develop at the beginning of the 70s. Simply put, the amount of risk associated with the situation would be greater than the amount of insurance coverage that could be obtained. As a result, businesses and other types have begun to look for other ways to protect themselves from potential losses, ktEré would work in conjunction with available insurance coverage and provide a greater degree of protection.
One approach to alternative risk transmission involves the creation of what is called insurance companies in captivity. These companies are often organized by traditional insurance and securing providers, but are structured to allow unconventional ways to invest. Companies can also sometimes buy additional coverage from third parties, helping to transfer some risk from both parents and prisoners, while still providing the insured party as much as possible to protect the possibility of protection.
Other methods may include accepting investments that help ensure protection in the case of a type of main event. One example of this lawyer is the purchase of disasters, which are problems with bonds that can be called and converted to cash if a covered natural or other type of disaster occurs. Aim to jE here use bond revenues to manage losses that are not covered by traditional types of insurance without impact on the amount of compensation that is received from these traditional policies.
Newer tools for use in alternative risk transmission strategies are still emerging, including investments such as weather derivatives that can provide a certain level of financial compensation when the insured party maintains damage as a result of the weather conditions. As a means to ensure additional protection against losses, the concept of art is likely to evolve, as the cost of recovering from unfortunate events is constantly increasing.