Can organizations retain some risks?

Organizations can indeed retain some risks as part of their overall risk management strategy, which makes the selection of the answer correct. Retaining risk means that an organization acknowledges the potential for financial loss associated with certain risks and decides to bear that risk internally rather than transferring it to another party, such as through insurance.

This decision can be influenced by various factors, including the nature of the risk, the organization's financial capacity, and its risk appetite. Organizations might choose to retain risk for several reasons, such as the costs associated with transferring the risk (like insurance premiums), the expectation that the potential loss is manageable, or the belief that the risk is unlikely to manifest, thus negating the need for external coverage.

Choosing to retain risk can be a strategic decision where the organization calculates that the long-term benefits or costs of bearing the risk outweigh the costs of transferring it. This approach allows for more flexibility in financial planning and operational management.