Self insurance of ___ occurs when a company takes responsibility for losses from certain risks.

Self-insurance of risk assumption occurs when a company chooses to take on the financial responsibility for certain risks instead of transferring that risk to an insurance provider. By assuming the risk, the company is acknowledging that it will cover any potential losses directly. This approach is typically used when the company believes that it can manage the associated risks effectively or when the likelihood of a loss occurring is relatively low.

By opting for self-insurance, a company can save on insurance premiums and potentially retain more control over its financial management. This approach is particularly relevant in the context of managing specific risks that the company is well-versed in or when the costs of traditional insurance outweigh the potential losses.

In contrast, risk avoidance means eliminating the risk altogether, risk reduction involves implementing measures to minimize the impact or likelihood of risks, and risk sharing involves distributing the risk among different parties, such as through partnerships or insurance policies. These strategies differ fundamentally from risk assumption, which is rooted in accepting the risk and preparing to address the consequences should a loss occur.