Methods used in risk financing

Ana Maria Popescu, Ștefan Virgil Iacob and Alina Eliza Dabija
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Ana Maria Popescu: Bucharest University of Economic Studies, Romania
Ștefan Virgil Iacob: “Artifex” University of Bucharest, Romania
Alina Eliza Dabija: University of Craiova, Romania

Theoretical and Applied Economics, 2020, vol. XXVII, issue 4(625), Winter, 143-158

Abstract: Given that in most risk management programs, risk control, which involves avoiding, preventing and reducing risks, is not fully effective and over time several methods of financing the losses that have occurred have been developed, such as would be detention or transfer. The withholding assumes that the injured party is also the one that bears the financial consequences, and the transfer involves the occurrence of a different entity from the injured party that bears the direct financial consequences. This method transfers the risk to another entity and involves an additional cost paid by the transferor to the one he accepts, namely the insurance premium or fees. By transferring risk through insurance, the bank is offered related risk management services, better defining its risk profile or can contribute to improving performance indicators and flows, thus preventing the crisis situation.

Keywords: risk management; financing methods; efficiency; indicators. (search for similar items in EconPapers)
Date: 2020
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