RSK 4803: Risk Retention Questions
and Answers Already Graded A+
2026
1
, WHAT IS RISK RETENTION ANSWER >> - Category of risk financing;
- when a company intentionally or unintentionally retains the financial consequences of
of a loss for its own account and does not transfer it to a 3rd party;
it is usually effective when:
- on other financing methods available,
- the worst possible loss is not serious and
- losses are highly unpredictable.
what is funded retained risk ANSWER >> when the co. makes provision for losses prior
to their occurrence;
- the funds are prepaid into a fund to finance predicted losses;
- the annual amount required to be retained is determined by assessing the co's historic
loss pattern which reflects an organisation's well-defined loss distribution.
advantages of funded risk retention ANSWER >> - it is a viable alternative for when
there is not market for that particular risk; or
the risk can not be fully transferred through insurance.
- it may also be less expensive than risk transfer in that:
it has reduced transaction costs;
2
and Answers Already Graded A+
2026
1
, WHAT IS RISK RETENTION ANSWER >> - Category of risk financing;
- when a company intentionally or unintentionally retains the financial consequences of
of a loss for its own account and does not transfer it to a 3rd party;
it is usually effective when:
- on other financing methods available,
- the worst possible loss is not serious and
- losses are highly unpredictable.
what is funded retained risk ANSWER >> when the co. makes provision for losses prior
to their occurrence;
- the funds are prepaid into a fund to finance predicted losses;
- the annual amount required to be retained is determined by assessing the co's historic
loss pattern which reflects an organisation's well-defined loss distribution.
advantages of funded risk retention ANSWER >> - it is a viable alternative for when
there is not market for that particular risk; or
the risk can not be fully transferred through insurance.
- it may also be less expensive than risk transfer in that:
it has reduced transaction costs;
2
