Alternative Risk Transfer and Its Implication on Business Operations in Nigeria

Admin/ May 15, 2018/ Journal of Business and Social science/ 0 comments

Alternative Risk Transfer and Its Implication on Business Operations in Nigeria

Ehiogu Chizoba Perpetua : Department of Insurance & Actuarial Science, Imo State University Owerri, Imo State chizzypep@gmail.com

 Abstract

This paper investigated the alternative risk transfer (ART) and its implication on business operations in Nigeria. ART is not one product, but rather a pattern of doing business; ART is the use of techniques other than traditional insurance and reinsurance to provide risk bearing entities with coverage or protection. Most of these techniques permit investors in the capital markets to take a more direct role in providing insurance and reinsurance protection, and as such the broad field of ART is said to be bringing about a convergence of insurance and financial markets. This requires the existence of prudent management through the application of some alternative insurance transfer mechanisms like risk, retention, research, diversification, and hedging. This process can be achieved through various methods of physical risk management: staff training, safety equipments, and so on. The researcher employed qualitatively review in this work. The study showed that alternative risk transfer is beneficial to individuals, corporate organizations as it presents risk managers with more opportunities to hedge risks in new and innovative ways, and to be less dependent on insurance cover. This study in conclusion puts forth that, alternative risk transfer enable companies to select the most appropriate risk finance and acquire contingent capital at economic cost. It recommended among others that, organizations should establish a strong structure and finance risk management unit with qualified staff to manage organizational risk and provide expert advice in risk management.

Keywords:  Insurance, Fund, Transfer, Risk-Management, Mechanism

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