A firm is self-insuring against adverse contingencies out of its own cash flows.Identify the process.

Question

Quizplus · Accepted Answer

Risk retention is the process where a firm decides to bear the risk of loss itself rather than transferring that risk to an insurance company or another party. In this scenario, the firm is using its own cash flows to cover any adverse contingencies, which is a form of self-insurance or risk retention.

A Firm Is Self-Insuring Against Adverse Contingencies Out of Its