National Alliance Risk Management Practice Exam

Active retention in risk management refers to a deliberate decision to retain risk rather than transfer it to another party, such as an insurance provider. This strategy involves an organization recognizing and accepting the potential adverse effects of a risk while simultaneously implementing measures to mitigate its impact.

By accepting the risk, the organization is actively engaged in understanding the risk situation, evaluating its potential consequences, and taking steps to manage or reduce its likelihood. This could include implementing risk control measures, creating contingency plans, or setting aside financial resources to cover potential losses.

In contrast, the other options describe different approaches to risk management. Transferring risk to an insurance provider represents a passive retention strategy, while minimizing risks through strict controls involves active risk management but does not inherently include the acceptance of risk. Ignoring potential hazards would be counterproductive and not a responsible risk management practice. Therefore, the definition of active retention closely aligns with the conscious acceptance and management of risk that is encapsulated in the chosen statement.