Which of the following describes a strategy for handling risk by keeping it oneself?

The correct answer describes the strategy of retaining risk, which refers to the decision to keep the risk within the organization or individual rather than trying to eliminate or mitigate it. When an individual or entity chooses to retain risk, they acknowledge its existence and accept the consequences, whether financial or operational, that may arise from that risk. This approach might be chosen because the potential impacts of the risk are deemed manageable, or the costs associated with transferring or mitigating the risk are perceived to be higher than the potential loss.

Retaining risk can also involve setting aside reserves or savings to cover potential losses, thus ensuring that the entity is prepared to deal with any negative outcomes that may occur. This strategy is common when the risks involved are low in probability or when the costs to insure against them would not be justified given the likelihood of loss.

In contrast, reducing risk involves taking measures to lower the probability or impact of adverse outcomes, sharing risk typically means distributing the risk with others (like through partnerships or insurance), and transferring risk refers to shifting the burden of risk to another party, such as through purchasing insurance policies. Each of these strategies serves a specific purpose; however, retaining risk focuses on accepting and managing the risk internally.