Risk Managers typically use “frequency” (based on the law of large numbers) and “severity”, as well as risk appetite, when deciding whether to retain or transfer a particular risk. From the viewpoint of HEB, contrast shoplifting, fire and hurricane risks to explain how HEB’s risk manager would make such a decision and opine which risks you would retain or transfer. 

Is there any correlation and covariance between those risks?

Answer rating: 100% (QA)

HEBs Risk Management Shoplifting Fire and Hurricanes Contrast of Risks Risk Frequency Severity HEBs Risk Appetite Retain or Transfer Shoplifting High ... View the full answer