What are the Examples of Retention of loss exposure?

Retention of loss exposure refers to the decision by an organization to accept the risk of loss rather than transferring or avoiding it. Examples include maintaining a self-insured retention (SIR) on an insurance policy, where a company pays for losses up to a certain amount before insurance coverage kicks in. Additionally, businesses might choose to retain losses by not purchasing insurance for certain risks, such as minor property damages, or by setting aside reserves to cover potential losses instead of transferring that risk to an insurer.