What best describes self-insurance?

Self-insurance is best defined as a strategy where an individual or organization, in this case a government, retains the risk of financial loss rather than transferring it to an insurance company. This method involves systematically accumulating resources to cover potential losses that may occur over time.

By setting aside funds or creating reserves, the government can manage financial risks associated with unexpected events, such as property damage or liability claims. This proactive approach allows them to have the financial capability to address losses when they arise without relying on external insurers.

This option captures the essence of self-insurance, highlighting the government's ownership of the risk and its approach to managing that risk through resource accumulation. Other options presented do not accurately describe this concept in the context of risk management for governments.