Risk Sharing Law & Legal Definition
A risk sharing partnership is a business partnership in which consequential costs and benefits are distributed amongst all participating partners. In doing so, partners rely on the commercial success of the business to receive their share of financial benefit from the enterprise while reducing the risk of loss involved if the enterpise looses money.
Example: Since the mid 1990’s the global aircraft industry has been creating new solutions for product development. They tried risk sharing partnership with suppliers in an attempt to reduce investments and consequently the dependence on loans. In these type partnerships the partners not only invested in tooling, engineering and infrastructure but also more directly in the projects, in investments and design activities, acquiring rights to future sales income of products.
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