A contingency is a potential event or circumstance that is uncertain but could have either positive or negative consequences on an entity's financial situation or operations. It is often considered in risk management and financial planning.
A contingency fund is an amount reserved for a possible loss, such as those caused by a business setback. Contingency funds and other reserves set aside are not deductible for tax purposes.
In accounting and finance, 'float' refers to various concepts including delayed money processing, publicly held stock proportions, contingency fund allocation, and processes related to financial transactions and securities.
Risk retention is a method of self-insurance where an organization retains a reserve fund to offset unexpected financial claims. It involves setting aside funds to handle potential future losses and can be an effective risk management strategy under certain conditions.
