Generally speaking for high frequency low severity events, the optimal risk management strategy is to _________.

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Generally speaking for high frequency low severity events, the optimal risk management strategy is to _________.

Assume you are interviewing for a risk manager job at a very large, unique organization. Given that the organization is the only one of its kind on Earth, it is not part of any industry. The organization employs over 100,000 workers in 100 different countries. 

(1) Give three reasons for this organization to use a captive. 

(2) Describe a specific captive arrangement that would allow the organization to manage its risks while achieving the most benefits. 

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