risk retention

Definition

A form of self-insurance employed by organizations which have determined that the cost of transferring a risk to an insurance company is greater over time than the cost of retaining the risk and paying for losses out of their own reserve fund.

Use risk retention in a sentence

Our risk retention policy was good and we all thought our company had a good handling on risk and everything.

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Due to the fact that the insurance would be too costly, the company decided to implement risk retention and manage the situation in house.

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When doing a cash flow analysis and a way to reduce the company's overhead, the controller and CFO both agreed that risk retention was a better route to go since they felt their company had very little risk and paying insurance premiums was depleting the company of funds.

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risk rate risk retention group (RRG)