Which method of managing risk is characterized by a group decision to cover losses collectively?

The method characterized by a group decision to cover losses collectively is sharing. This approach involves individuals or entities coming together to pool their resources, thereby distributing the risk among the members of the group. By sharing the risk, the financial burden of potential losses is lessened for each participant, as they collectively take on the responsibility.

In practice, this often occurs in scenarios such as insurance pools or cooperative agreements where different parties agree to help cover losses that may arise within the group. This collective management of risk can encourage collaboration and support among members, fostering a sense of community and mutual assistance.

The other methods, while important in risk management, do not embody the principle of collective coverage in the same way. Transfer involves shifting the risk to another party, typically through insurance, while avoidance refers to eliminating the risk altogether. Retention means accepting the risk and its potential consequences instead of sharing or transferring it.