n NISM Certifications
X NISM Series X
Medium

When a person chooses to retain a risk instead of insuring it, this approach is known as risk retention, involving self-insurance through reserves rather than transferring risk to an insurer.

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Risk Mitigation

  2. Risk Retention

    Correct answer

  3. C

    Risk Transfer

  4. D

    Risk Dilution

Why this is the answer

Risk retention involves consciously accepting the risk and setting aside reserves to cover potential losses rather than transferring it.

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