Risk diversification refers to the process by which:
A)risks are shared across many different assets or people,reducing the impact of any particular risk on any one individual.
B)people organize themselves in a group to collectively absorb the cost of the risk faced by each individual.
C)insurance companies change the risk aversion of their clients.
D)insurance companies reallocate the likelihood of catastrophes happening.

Question

Quizplus · Accepted Answer

Risk diversification involves spreading risks across several assets or individuals, reducing the impact of a single risk on any single person. This strategy is designed to minimize potential losses and protect against unexpected events. By diversifying risks, individuals can better manage their portfolio and safeguard their assets against potential threats. Option B refers to risk pooling, and options C and D are not relevant to the concept of risk diversification.

Risk Diversification Refers to the Process by Which