What is Risk Forwarding? - Explained

What is Risk Forwarding - Explained

Risk Forwarding is a great tool where almost every organization use knowingly or unknowingly in their operations. Risk forwarding helps organizations to be cost efficient and time efficient in many activities where the time and cost needs to be saved.

Risk Forwarding is forwarding the failing risk of a task to another party or to another organization. Whenever global organization needs to take off their hand from a task where that particular organization doesn't have required expertise to complete such task where the risk of failure is high, that organization simply forward that particular task to another organization or person where to forward the risk and take off hands from that task.

Including individuals to small, medium and enterprise and governments do risk forwarding in different phases of tasks and activities.

Real life Scenario 1

If you are an individual who owns a car, you probably would have insure the car with a reputed insurance company at a competitive policy premium. You might have done the insurance maybe because it might not be legal to take a vehicle to road without having an insurance. But the main concept of insurance came to the society as a concept of risk forwarding. When you purchase a car, you might not be be financially capable of buying another car or repair the car at the entire cost which you paid to purchase the car. That's where the insurance comes to the roll and help out to repay the full amount whatever the amount by evaluating the insurance policy.

Real life Scenario 2

Many government projects are offered to the private sector companies in different scenarios. One reason for governments to offer the certain projects to the private sector companies is the government doesn't have experience people and expertise within the organization to do such a task. There are many governments in the world who outsource the software system projects to other private sector companies to forward the risk. By forwarding the risk to another organization government probably get the software system project done within the timeline they planned and will get a reliable solution which has been developed by reputed and qualified people where the expertise of the domain is at a really good level.