No single insurance policy applies to all risks, but transfer of risk is a common means of financing a loss. (Photo: Shutterstock)
There are various ways to finance loss from professional mistakes to cyberattacks and other risks. Insurance is one option, but in this series on managing risk, we need to move on to non-insurance management — how to pay for a loss that may occur regardless of how much loss control has been employed.
Risk transfer
When teaching risk management to classes, my favorite way of handling the costs of risk is to: "Stick some other poor schnook with the loss!" This is risk transfer and a common means of avoiding loss. I ask how many in my audience have ever rented something, and most have. Most have also signed an agreement they didn't bother to read. However, if something bad happened, were they the "stuckee" or the "stuckor"?
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