Overview

risk pooling


Related Overviews

 

More Like This

Show all results sharing this subject:

  • Economics

GO

Show Summary Details

Quick Reference

Combining two or more risky projects, with returns which are not perfectly correlated. The expected sum of the returns to such projects is less dispersed than the expected returns on the separate projects. Insurance companies work by pooling the risks on a number of separate projects, for example the chance that any one of many houses will catch fire. Risk pooling also applies to portfolios of investment and unit trusts, which hold a number of different shares whose behaviour is at least partly independent. Risk pooling is one source of advantage for larger organizations relative to smaller ones.

Subjects: Economics.


Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.