GlossaryEN1 min readUpdated: Jun 22, 2026
Transfer of Risk
Transfer of risk defines the precise moment at which the buyer assumes liability for loss, damage, or deterioration of goods – regardless of who holds legal title.
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Source: https://iccwbo.org/business-solutions/incoterms-rules/
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
Transfer of risk defines the precise moment at which the buyer assumes liability for loss, damage, or deterioration of goods – regardless of who holds legal title. In international trade, this point is determined by the Incoterms rule agreed in the sales contract: under FOB, risk passes once the goods are on board the vessel; under CIP, the seller bears risk until handover to the first carrier. The distinction between transfer of risk and transfer of ownership is critical for insurance coverage and damage claims: any loss occurring after the risk has passed falls within the buyer's sphere of responsibility. Freight forwarders and legal counsel therefore scrutinise the agreed delivery terms carefully when reviewing commercial contracts.
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