Definition, Meaning & Synonyms
risk-pooling
noun
/rɪsk ˈpuːlɪŋ/
Definition
Risk-pooling is a strategy used to spread the financial risk associated with uncertain events among multiple parties.
Examples
- Insurance companies often use risk-pooling to offer coverage to multiple clients while minimizing their own financial exposure.
- Risk-pooling is prevalent in cooperative health plans, allowing members to share the costs of medical expenses.
Meaning
By combining resources and sharing potential losses, risk-pooling aims to reduce the impact of adverse outcomes on any single entity involved.
Synonyms
- Risk-sharing
- Loss-sharing
- Collective risk management
