Which term describes the approach of dealing with small losses using personal funds?

The concept of dealing with small losses using personal funds is best described by the term risk retention. This refers to the idea of accepting the possibility of a loss and handling it with one's own resources when the financial impact is minor or manageable. By choosing to retain the risk, individuals or businesses absorb minor losses without transferring that risk to an insurance provider or another party. This approach allows for cost savings, as lower-level risks are not typically insured due to the expense versus the potential payout.

Other terms such as risk management involve a broader strategy that includes identifying, assessing, and prioritizing risks, while risk avoidance refers to eliminating the risk entirely. Risk transfer involves shifting the financial burden to another entity, typically through insurance. Thus, the correct term that specifically addresses the use of personal funds for minor losses aligns with risk retention.