Question

4) All of the following statements about risk retention are true except:

a. It may be used intentionally if commercial insurance is unavailable.
b. It may be used passively because of ignorance.
c. Its use is most appropriate for low-frequency, high-severity types of risks.
d. Its use results in cost savings if losses are less than the cost of insurance.

Answer 1

C. Its use is most appropriate for low-frequency, high-severity types of risks

Step-by-step explanation:

Risk retention is a company's decision to take responsibility for a particular risk it faces, as opposed to transferring the risk over to an insurance company. Companies often retain risks when they believe that the cost of doing so is less then the cost of fully or partially insuring against it.