Glossary

Risk securitization refers to the use of a debt or equity instrument (security) to finance risk, using a risk index to value the security and/or a specified loss event as a determinant of the interest or repayment date.

Risk sharing, also known as "risk distribution," means that the premiums and losses of each member of a group of policyholders are allocated within the group based on a predetermined formula. Risk is considered to be shared if there is no policyholder-specific correlation between premiums paid into a captive, for example, and losses paid from the captive's reserve pool.

Used in tax deductibility discussions, risk shifting connotes the transfer of risk to a separate party.

Risk smoothing refers to financing risk in such a way that the financial impact of incurred losses is distributed between members of the risk pool over more than one financial reporting or policy period.

Risk tolerance refers to the willingness of an organization to incur risk to gain future reward.

Risk types refers to the different ways in which risks are categorized. A few categories that are commonly used are market risk, credit risk, operational risk, strategic risk, liquidity risk, and event risk.

Risk volatility is a measure of the distance between an expected result and its standard deviation.

Road rage is an event in which an angry motorist harms or threatens to harm another driver, a pedestrian, or a passenger.

Robbery is theft during which force is used or threatened.

Robbery and safe burglary coverage is a type of policy that insures against the loss of money and securities by robbery or safe burglary.