In TCOR, which category is not directly included?

In TCOR, which category is not directly included?

• A. Outside service costs
• B. Marketing expenses
• C. Insurance costs
• D. Retained losses

Answer: (B)

Total cost of risk sums all costs tied to risk management and bearing risk. It includes payments for insurance (transferring risk), costs paid to outside services that help manage or control risk, and the losses the organization retains or self-insures. Marketing expenses, however, are about selling and promoting products and don’t directly relate to mitigating, transferring, or funding risk exposures. That’s why marketing expenses aren’t a direct component of the total cost of risk. The other categories fit TCOR because they are tied to how the organization manage and finance risk.

Total cost of risk sums all costs tied to risk management and bearing risk. It includes payments for insurance (transferring risk), costs paid to outside services that help manage or control risk, and the losses the organization retains or self-insures. Marketing expenses, however, are about selling and promoting products and don’t directly relate to mitigating, transferring, or funding risk exposures. That’s why marketing expenses aren’t a direct component of the total cost of risk. The other categories fit TCOR because they are tied to how the organization manage and finance risk.