Feasibility of Alternate Risk Handling Techniques

The Risk Management Process involves either stopping losses from happening or paying for those losses that do occur. By separating these risk management techniques into Risk Control and Risk Financing we can categorize risk by the method we wish to use to address it. Risk control techniques are designed to minimize the frequency and severity of accidental loss or to make losses more predictable. Some of the techniques we use are:

	Exposure avoidance
	Loss prevention
	Loss reduction
	Segregation of loss exposures
	Contractual transfers

Risk Financing techniques involve all the ways of generating funds to pay for losses that Risk Control techniques do not stop from happening. We classify these techniques into two categories:

	Retention-funds to pay losses originate from within the organization
	Transfer-funds to pay losses originate from outside the organization

While the distinction between these two categories is helpful from a planning and analyzing standpoint, risk financing techniques are quite often a combination or blending of these two techniques or a selected technique may include elements of each.

Retention deals with the accounting aspects of funding losses while transferring risk evolves from a contractual arrangement to move risk form your organizations financial statement to that of another party. Transfers commonly are insurance but, non insurance transfers are a very common way of handling risk.

After identifying and analyzing risk PCS will review the feasibility of these risk handling techniques and work with your organization to objectively evaluate the proper approach.

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