RMI 2101 Study Guide - Midterm Guide: Cost Overrun, Decision Rule, European Cooperation In Science And Technology

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Risk financing options: risk financing deals with sources of funds to pay for losses (external or internal) Risk transfers of the financing type (1) seek external sources from third parties to finance losses (2) still have the asset or activity exposed to loss (3) transfer the financial responsibility for the loss, not asset/activity (insurance) Insurance: transfer financial responsibility for loss to insurer, not asset/activity. Non-insurance risk transfers of the financing type. Leases: tenant responsible for all property loss while occupying ; owner ultimately responsible for losses if tenant fails. Hold harmless agreement: someone contractually accepts risk for you (contractor doing project, vendor performing task, company doing firm work) Retention: a firm or individual engaging in retention assumes the financial responsibility for the losses that do occur : retain exposure to loss (1) not buying insurance (2) insurance with a deductible. Funded retention: firm set aside funds every period to pay for losses - predictable and high severity.