1) Briefly explain the difference between risk control, risk financing and risk transfer. Risk Control, Risk Financing and Risk Transfer are the 3 main risk management methods. These can be broadly classified as: (A) loss retention (includes risk control and risk financing) and (B) loss shifting. With retention, a company retains the obligation to personally pay some or all of the losses, while risk transfer allows the company to transfer the risk to another party. Risk control is the action that reduces the expected cost of losses by reducing the frequency or magnitude of losses. Pre-loss action that reduces the frequency of losses is called loss prevention methods, while post-loss action that reduces the severity of losses that occur is called loss reduction methods. For example, smoke-activated sprinkler systems are one method of reducing losses. But many types of leak checks affect both the frequency and magnitude of leaks, as is the case with airbags installed in automobiles. The method used to obtain funds to pay for losses that occur is called risk financing, which could be classified as pre-loss and post-loss. loss methods. Funds set aside before a loss, such as retained reserves or cash flows from ongoing operations, constitute pre-loss risk financing. Post-loss risk financing, such as arranging a bank overdraft or contingent capital, is funds that are injected after a loss, but usually with terms agreed before the loss, so that the business does not have to trade from a weak position Risk transfer includes purchasing insurance or finite risk insurance before a loss occurs or issuing stock after a loss occurs and sharing the risk among shareholders at in order to obtain a return. Hedging is also a way to transfer risk in financial markets. Basically,... middle of the paper... in room rates and occupancy levels. The Group's reputation also depends on its relationships with its external stakeholders and business partners. There are two types of impacts of tactical risks on the Group. One is the risk of losing franchise and management agreements. This is an inherent risk for the hotel sector and the Group's light business model. Intense competition within the hotel industry could reduce the number of suitable business opportunities offered to the Group and could increase the bargaining position of property owners seeking to become a franchisee or manager. IHG's large geographic spread and fee-based model mean it is exposed to a wide range of risks. Generally, events will affect specific or all hotels, but the most significant countries are not expected to have a material impact on the Group's results. (IHG annual report, 2012)