Summary |
This text provides an overview of risk financing and risk financing plans. Risk financing is defined in this text as a means to obtain funds to pay for or offset an organization's losses that arise from risk. Risk is defined in this text as a potential variation in outcomes, so it can result in unexpected losses and, often, unexpected gains for an organization. Therefore, an important concept that, is discussed throughout this text is that an organization can use its gains arising from risk to finance some or all of its losses arising from risk.
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