Loss exposures which are both high-frequency and high-severity in nature are best handled by assumption.

Question

Quizplus · Accepted Answer

Loss exposures that are both high-frequency and high-severity in nature require a more proactive approach to risk management. Assuming that the losses will occur and not taking steps to mitigate the risks can be a costly mistake. Other strategies such as risk transfer (insurance), risk avoidance, or risk reduction may be more appropriate.

Loss Exposures Which Are Both High-Frequency and High-Severity in Nature