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Risk Transfer simply involves transferring "only" risk to another person for a price. For example, the downside risk of stock can be transferred by purchasing a call option. In this way, the buyer of call option transfers its risk to the writer of the call option. Another example is insurance, wherein, the buyer of insurance transfers its risk to an insurance company.

Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk among two or more persons. I think the "partnership" form of business organization is the most common (and oldest) practice of risk sharing. Banks also use this practice to lend a big amount to individual large size corporation, each bank supplying a portion of the loaned funds. In these cases the profits (as well as potential losses) are shared between the parties.

Risk Transfer simply involves transferring "only" risk to another person for a price. For example, the downside risk of stock can be transferred by purchasing a call option. In this way, the buyer of call option transfers its risk to the writer of the call option. Another example is insurance, wherein, the buyer of insurance transfers its risk to an insurance company.

Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk among two or more persons. I think the "partnership" form of business organization is the most common (and oldest) practice of risk sharing. Banks also use this practice to lend a big amount to individual large size corporation, each bank supplying a portion of the loaned funds. In these cases "both" the profits, as well as potential losses, are shared between the parties.

Risk Transfer simply involves transferring "only" risk to another person for a price. For example, the downside risk of stock can be transferred by purchasing a call option. In this way, the buyer of call option transfers its risk to the writer of the call option. Another example is insurance, wherein, the buyer transfers its risk to an insurance company.

Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk with two or more person. I think, "partnership" is the most common practice of risk sharing. Banks also use this practice to lend a big amount to individual large size corporation.

Risk Transfer simply involves transferring "only" risk to another person for a price. For example, the downside risk of stock can be transferred by purchasing a call option. In this way, the buyer of call option transfers its risk to the writer of the call option. Another example is insurance, wherein, the buyer of insurance transfers its risk to an insurance company.

Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk among two or more persons. I think the "partnership" form of business organization is the most common (and oldest) practice of risk sharing. Banks also use this practice to lend a big amount to individual large size corporation, each bank supplying a portion of the loaned funds. In these cases the profits (as well as potential losses) are shared between the parties.

Risk Transfer simply involves transferring "only" risk to another person for price. For example, downside risk of stock can be transferred by purchasing a call option. In this way, the buyer of call option transfer its risk to writer of call option. Another example is insurance, wherein, the buyer transfer its risk to insurance company.

Risk Sharing is entirely different concept. It involve sharing (dividing) common risk with two or more person. I think, "partnership" is most common practice of risk sharing. Banks also use this practice to lend big amount to individual large size corporation.

Risk Transfer simply involves transferring "only" risk to another person for a price. For example, the downside risk of stock can be transferred by purchasing a call option. In this way, the buyer of call option transfers its risk to the writer of the call option. Another example is insurance, wherein, the buyer transfers its risk to an insurance company.

Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk with two or more person. I think, "partnership" is the most common practice of risk sharing. Banks also use this practice to lend a big amount to individual large size corporation.