What is the primary goal of risk transferring?

The primary goal of risk transferring is to share the burden of risk. This strategy involves moving the financial impact of a risk to a third party, often through methods such as insurance or outsourcing functions. By doing this, the organization does not eliminate the risk itself but rather shifts the responsibility for managing that risk to another entity.

For example, when a company takes out an insurance policy, it pays a premium to transfer the financial risk of certain losses to the insurer. This allows the organization to protect itself against significant financial impacts and ensures that it can focus on its core operations without the uncertainty of potential losses weighing heavily on its budget and resources.

Other approaches to risk management, such as terminating risks, maintaining control, or tolerating risks, involve different strategies that do not primarily focus on sharing the burden or transferring the financial implications to others. This makes sharing the burden through risk transferring a stronger fit for this particular goal.