Determination of Economic Viability of Risk Transfer

The process of minimizing the occurrence probabilities of more excessive damage sizes for a risk, makes in the same way as own liability for previously transferred risks or transfer of risks carried under own liability business economic sense on the provision that the ensuing benefits exceed pertinent costs. Consequently in this case, a procedure is outlined to determine the economic viability of such measures.

In order to determine the economic viability of a measure to optimise a risk, a Delta-Analysis may be performed. Under the Delta-Analysis, the actual risk function P{R(xActual)i} is correlated against the planned risk function P{R(xTarget)i} and the difference is determined between the actual and planned value.

So the challenge for a Risk Manager is to calculate the expectancy value T{R(x)i(mean)} for the Actual and the Target risk funktion.

 

Our Enterprise Risk Manager Software supports you by doing this Delta-Analysis.

Economic Viability of Risk Transfer

Risk Optimization