Shifting Risk [Insurance] Law and Legal Definition

Shifting risk means the transfer of risk to a separate party. It refers to the changing risk addressed in the insurance policy which insures a stock of goods or similar property that varies in amount and composition in the course of trade. In tax disputes, the Internal Revenue Service (IRS) and numerous courts have observed that, in order for a financial arrangement to be insurance, the presence of both risk shifting and risk distribution factors are essential.