Risk Pooling is the ability to reduce the risk of a unit by making more accurate predictions about a large pool of units.

Question

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Risk pooling involves grouping a large number of units together to reduce the risk that any one unit will experience negative outcomes. By analyzing the behavior of the entire pool, it becomes easier to make accurate predictions about the likelihood of different events occurring, which can help to reduce overall risk.

Risk Pooling Is the Ability to Reduce the Risk of a Unit