MANAGEMENT

Detailed explanation-1: -What is Risk Retention? Risk retention is the practice of setting up a self-insurance reserve fund to pay for losses as they occur, rather than shifting the risk to an insurer or using hedging instruments.

Detailed explanation-2: -Risk-retention is the method secured for all other types of risks, that is, unforeseen or foreseen but not significant. For example, risk of getting a flat tyre while on a long road trip. Although the risk is unknown, it is not as significant and you can easily manage it out of your pocket.

Detailed explanation-3: -Retention refers to the assumption of risk of loss or damages. This expresses how a party, usually a business, handles or manages its risk. When a business retains risk, they absorb it themselves, as opposed to transferring it to an insurer.

Detailed explanation-4: -Risk retention, (aka active retention, risk assumption), is handling the unavoidable or unavoided risk internally, either because insurance cannot be purchased or it is too expensive for the risk, or because it is much more cost-effective to handle the risk internally.