If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?

When an insured purchases an insurance policy with a large deductible, they are engaging in the risk management technique known as retention. This approach involves the individual or organization accepting the potential financial loss associated with certain risks rather than transferring that risk entirely to an insurance provider. By opting for a larger deductible, the insured retains a portion of the risk, thereby lowering their premium costs.

This strategy is often employed by individuals or businesses that can afford to absorb smaller losses and are seeking to minimize insurance costs. It reflects a conscious decision to retain responsibility for certain risks while still maintaining coverage for larger, less frequent losses.

In contrast, other risk management techniques like avoidance, sharing, or transfer do not accurately describe the intention behind choosing a high deductible. Avoidance would involve eliminating the risk altogether, sharing would involve distributing the risk among multiple parties, and transfer would imply passing the risk onto an insurer with a lower deductible, which is not the case here. Thus, choosing a large deductible is a direct example of retention, aligning perfectly with the context of the question.