Funds that are for identified risks that have a low probability of occurring and that decrease as the project progresses are called contingency reserves.
What is contingency reserve?
Contingency reserve is defined as an amount set aside to cater for unforeseen circumstances by a firm. It is a surplus amount taken from profit of an organization.
Here, certain funds are earmarked out of the profit made by a firm, indicating a reservation against a specific or general contingency.
Hence, funds that are for identified risks that have a low probability of occurring and that decrease as the project progresses are called contingency reserves.
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