There are several advantages if a firm chooses to engage in…

There are several advantages if a firm chooses to engage in self-insured retention as opposed to engaging in a risk transfer (i.e. purchase insurance)  All of the following are advantages of self-insured retention as a risk financing technique – EXCEPT:   

One of the main disadvantages of self-insured retention as a…

One of the main disadvantages of self-insured retention as a risk financing technique is the possibility of sustaining a “catastrophic loss” > which the firm will be responsible for paying if they choose to engage in retention.  What is the key reason that the possibility of a catastrophic loss makes engaging in self-insured retention difficult, if not impossible?