In the context of insurance, ‘Risk Retention’ indicates a situation where: 1.Possibility of loss or damage is not there.
2.Loss producing event has no value.
3.Property is covered by insurance.
4.One decides to bear the risk and its effects.
In the context of insurance, ‘Risk Retention’ indicates a situation where:
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The correct answer is: 4. One decides to bear the risk and its effects.
Explanation: Risk retention refers to a situation where an individual or organization chooses to accept the potential loss associated with a risk rather than transferring that risk to an insurance company. This means they plan to manage and absorb the financial consequences if the risk materializes. It’s often used when the costs of insuring against the risk are greater than the potential losses.