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A risk retention group (RRG) in business economics is an alternative risk transfer entity in the United States created under the federal Liability Risk Retention Act (LRRA). [ when? ] RRGs must form as liability insurance companies under the laws of at least one state—its charter state or domicile.
Risk-retention pools are technically retaining the risk for the group, but spreading it over the whole group involves transfer among individual members of the group. This is different from traditional insurance, in that no premium is exchanged between members of the group upfront, but instead, losses are assessed to all members of the group.
Risk Retention Groups (RRG): self-insurance capital (money) contributed by several companies that can range from small to medium in size. Self-Insured Retentions (SIR): capital (money) set aside to be used when losses occur. Earnings Protection: policies that are available by specific loss of earnings in a certain financial period.
Traditional forms of finance include risk transfer, funded retention by way of reserves (often called self-insurance) and risk pooling. Alternative risk finance is the use of products and solutions which have grown out of the convergence of the banking and insurance industry. They include captive insurance companies and catastrophic bonds, and ...
In theory, a small group of individuals or companies could band together to insure one another and form a reciprocal. In consumer insurance, more recently, entrepreneurs have formed attorneys-in-fact which then form reciprocals by providing the initial capital (often as a surplus note), attracting subscribers, and managing the exchange.
Risk management is predicting and managing risks that could hinder the organization from reliably achieving its objectives under uncertainty. Compliance refers to adhering with the mandated boundaries (laws and regulations) and voluntary boundaries (company's policies, procedures, etc.).
ISO 31000 is an International Standard for Risk Management which was published on 13 November 2009, and updated in 2018. An accompanying standard, ISO 31010 - Risk Assessment Techniques, soon followed publication (December 1, 2009) together with the updated Risk Management vocabulary ISO Guide 73.
ALM sits between risk management and strategic planning. It is focused on a long-term perspective rather than mitigating immediate risks; see, here, treasury management . The exact roles and perimeter around ALM can however vary significantly from one bank (or other financial institution ) to another depending on the business model adopted and ...