Financial risk management techniques include risk retention and risk transfer.

First, keep the risk.

Self-retention risk, also known as risk self-retention or risk taking, refers to the irrational or rational initiative of enterprises to take risks, that is, enterprises make up for losses with internal resources. Insurance and risk retention are two main financing methods for enterprises after losses, and they are both important risk management means. Risk retention is common in large enterprises in developed countries at present.

Risk retention means that the project risks are retained in the risk management subject, and the risks are resolved by taking internal control measures or not taking measures for these retained project risks. The fundamental difference between risk retention and other risk countermeasures is that it does not change the objective nature of project risk, that is, it does not change the probability of project risk and the seriousness of potential loss of project risk.

Second, transfer risks.

Refers to a risk management method in which some units or individuals consciously transfer losses or financial consequences related to losses to other units or individuals to avoid taking risks and losses. If an insurance contract is signed. The insured pays the premium and transfers the personal property risk, personal risk and liability risk to the insurance company.

Financial risk management technology:

Financial risk management technology is to provide funds to reduce the cost of losses. That is, through the financial arrangements made before the accident, the economic difficulties and mental worries caused by the accident can be relieved, and financial support can be provided for enterprises to resume production and maintain normal life.

In the practice of risk management, enterprises often reduce insurance premiums by determining a reasonable amount of retained risks. On the other hand, insurance companies often require insured enterprises to keep part of their risks in order to improve their risk awareness.

Therefore, in enterprise risk management, risk retention and insurance transfer are often combined to achieve the expected risk management effect with the lowest cost risk management technology combination.

The key to the combination of risk retention and insurance transfer is to determine a reasonable risk retention amount through financial analysis and statistical analysis, so as to achieve the best combination of the two financial risk management methods. In insurance practice, when the amount of retained risk increases, the annual insurance premium will decrease, but the decrease of insurance premium is not linearly proportional to the increase of retained risk.