MANAGEMENT

Detailed explanation-1: -What is risk pooling? The pooling of risk is fundamental to the concept of insurance. A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums.

Detailed explanation-2: -Risk pooling can be used in a wide variety of inventory control decisions. For example: the problem of choosing between separate warehouses that independently service their local areas versus one that is centralized and services all areas is easily resolved by thinking of the problem in terms of risk pooling.

Detailed explanation-3: -Risk management is the process of identifying, assessing and controlling threats to an organization’s capital and earnings. These risks stem from a variety of sources, including financial uncertainties, legal liabilities, technology issues, strategic management errors, accidents and natural disasters.