Risk retention/reduction decisions
Decision to accept the uncertainty associated with particular risk exposure.
Decision to reduce the uncertainty.
Risk Retention
Disadvantages
Possible of higher losses
possible of higher tax
possible of higher expenses
Advantages
Low expenses
money save
Encourage loss prevention
Approaches
Aggregated
Low transaction
high transaction cost
Dis Aggregated
High unnecessaru coverage
high transaction cost
Evidence
Oil and gas
Gold mining
Insurance company