Strategic risk financing is the practice of reviewing and assessing a situation to determine a plan to cover financial risks. The goal is to develop a strategy to have enough protection while still being cost-effective. Often, a strategic risk financing decision comes down to whether or not it makes sense to buy insurance, what types of insurance to consider, how much coverage is needed, and other related details.
Deciding whether to buy insurance can be a crucial financial decision. While insurance does offer protection against a risk, it also means paying insurance premiums. If a person or company has the resources to cover a loss with their own resources, they may find it makes more sense to self-insure and avoid paying extra fees to an insurance company. On the other hand, they need to make sure they have enough money saved up to cover a loss; otherwise, the loss could leave them in dire financial circumstances.
Share this Term
Stay informed with Insuranceopedia!
The world of insurance can be complicated. Subscribe to the Insuranceopedia newsletter and stay in the know! Access expert content, industry term definitions and answers to your questions from knowledgeable insurance insiders. Arm yourself with what you need to know to keep your assets and your family safe.
Latest Articles
