Which of the following best describes the role of a self-insurer?

A self-insurer operates by retaining financial risk rather than transferring it to an insurance company through a traditional policy. This approach means that a self-insurer sets aside funds to cover potential losses instead of purchasing insurance coverage. This method is commonly utilized by businesses and organizations that have a strong financial base and can manage risks internally. They often conduct thorough risk assessments to ensure they can handle potential claims, making it a strategic choice for entities that are equipped to manage their own risk exposure.

The other options involve practices that are typical of insurers or risk management strategies that do not align with the self-insurance model. Some entities might purchase extensive coverage, underwrite policies, or assess risks, but these activities fall outside the direct definition of self-insuring, which focuses specifically on the retention of risk.