Six Stars Development Company is a little short on money and decides not to purchase insurance on their new properties. This practice is referred to as:

The practice of not purchasing insurance on new properties aligns with the concept of risk retention. Risk retention involves accepting the potential financial consequences of a risk rather than transferring that risk to an insurance company. By choosing not to buy insurance, Six Stars Development Company acknowledges the inherent risks associated with their properties and decides to absorb those risks themselves, rather than seeking a way to mitigate or transfer them through insurance coverage.

In this scenario, the company is essentially managing risk internally, which can be a strategic decision for businesses that may have the resources to cover losses or that wish to keep costs down. This decision also indicates a level of confidence in the stability and safety of their new investments, or a willingness to take on the potential risk.

The other concepts, such as risk avoidance, risk reduction, and risk transference, describe different strategies for dealing with risks. For instance, risk avoidance would mean taking steps to eliminate the risk entirely, whereas risk reduction would involve implementing measures to lessen the likelihood or impact of the risk. Risk transference, on the other hand, involves shifting the risk to another party, typically through an insurance policy. Each of these strategies represents a different approach to risk management compared to risk retention.