Whereas in the past risk transfer through insurance and risk retention through funding and self-insurance were the main recourses for organizations to finance their risks, various means of risk handling have been developed over the past two decades, forming an alternative market for risk financing.

The financing of risks is a key element in risk management strategy. Indeed the sources of finance have to be carefully selected to suit the particular needs of the group, as they will have a considerable impact on the group's value and balance sheet exposure. Therefore a thorough analysis of risk exposure and financial strength is necessary to define the appropriate retention levels and risk transfer solutions.

Among the risk financing solutions, captives proved to be an adequate solution for listed companies and for medium and large enterprises willing to use a vehicle enabling them to control and finance most of their risk exposures. In addition a captive help to survey the cost of the insurance and reinsurance programmes in place and simplifies the risk management reporting process.