Statement: The principle of risk transfer uses contractual incentives or penalties to shift the risk from one party to another.

Question

Quizplus · Accepted Answer

Risk transfer is a strategy where one party in a contract agrees to bear the risk of an unforeseen event, often through insurance, indemnification clauses, or other contractual agreements, effectively shifting the financial burden of that risk from one party to another.

Statement: the Principle of Risk Transfer Uses Contractual Incentives or Penalties