In risk management, what term is used for transferring financial risk to a professional risk carrier?

The term "risk securitization" refers to the process of transferring financial risk to a professional risk carrier, typically through the issuance of securities that are backed by a pool of assets or future cash flows related to risk. This mechanism allows organizations to mitigate their exposure to certain types of risks by engaging with financial institutions or investors who take on the risk in exchange for potential returns.

In this context, risk securitization provides a way for entities to shift the financial burden of unpredictable events or losses to parties that are better equipped to manage these risks, thus enhancing their overall risk management strategy. It effectively allows businesses to protect their financial stability while enabling risk carriers to assume the liability in return for a premium or other financial incentive.

The other terms mentioned do not match the definition of transferring financial risk to a risk carrier. For instance, "insurable interest" refers to a legal requirement that an insured must have a stake in the insured item or person, "contractual agreement" is a broad term encompassing various types of contracts, and the "underwriting process" relates to the evaluation and decision-making involved in accepting risks for insurance coverage. Each of these terms plays a role in the larger framework of risk management, but they do not specifically encapsulate the concept