The concept of "retained risk" refers to the level of risk that an insurance company is willing to take on without seeking protection through reinsurance. In other words, it is the amount of risk that the company is willing to self-insure. This decision is based on various factors such as the company's financial stability, its risk appetite, and the level of protection offered by reinsurance. Therefore, it is crucial for insurance companies to carefully assess and manage their retained risk in order to maintain their financial stability and profitability.
