When a business creates a subsidiary to handle the risk exposures, the business creates a captive.

Name: When a business creates a subsidiary to handle the risk exposures, the business creates a captive.
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Quizplus · Accepted Answer

A captive is a type of insurance company created and owned by a parent company to insure its own risks, thus a business creating a subsidiary for handling risk exposures is indeed creating a captive insurance company.

When a Business Creates a Subsidiary to Handle the Risk