Some businesses will set aside money to cover routine losses and buy "catastrophe" policies to cover big losses. This is an example of which of the following?
A) Avoiding the risk
B) Self-insuring against the risk
C) Reducing the risk
D) A loss-prevention program

Question

Quizplus · Accepted Answer

Self-insuring against the risk involves setting aside money to cover routine losses, which is exactly what the business is doing in this scenario. Catastrophe policies are purchased to cover big losses that may exceed what the business has set aside. This approach allows the business to have some control over their risk management strategy while also mitigating potential losses.

Some Businesses Will Set Aside Money to Cover Routine Losses