When an organization uses a highly formalized method of retention of a risk, it is said the organization has:
A)insured the risk.
B)self-insured the risk.
C)limited the risk.
D)reinsured the risk.
E)eliminated the risk.

Question

Quizplus · Accepted Answer

Self-insurance is a form of risk management where an organization sets aside a sum of money to use in case of a loss instead of purchasing insurance from a third party. This is considered a formalized method of retaining risk, as the organization is financially preparing to cover losses itself.

When an Organization Uses a Highly Formalized Method of Retention