Strategic Risk Financing
What Does Strategic Risk Financing Mean?
Strategic risk financing involves analyzing and evaluating a situation to devise a plan for managing financial risks. The objective is to ensure adequate protection while maintaining cost efficiency. This process often includes decisions about whether to purchase insurance, selecting the appropriate types of coverage, determining the necessary coverage limits, and addressing other related considerations.
Insuranceopedia Explains Strategic Risk Financing
Deciding whether to purchase insurance is a significant financial decision. While insurance provides protection against risks, it also requires paying premiums. If an individual or business has sufficient resources to cover potential losses independently, self-insuring may be more cost-effective, avoiding the additional fees associated with insurance. However, it’s essential to ensure adequate savings to cover any losses; otherwise, an unforeseen event could result in severe financial hardship.
