Research on Risk Assessment for Different People

Abstract

The traditional idea is that risk aggregation is the operating principle of the insurance industry, sometimes called the insurance principle, which refers to the aggregation of unrelated risk items to reduce risks [1]. Simply put, because insurance companies issue many policies to different customers with independent risk sources, each policy only accounts for a small part of the insurance company's portfolio. With this decentralized approach to achieve the purpose of reducing risk. However, selling more insurance means increasing the risk investment position, and the overall risk will also rise. Therefore, we find that simply increasing the sale of new independent policies cannot explain the insurance industry. Subsequently, we put forward the concept of risk sharing, which is also the basic principle used by the insurance industry, that is, holding a large number of policies in diversification on the basis of controlling the total risk by selling shares to shareholders. Spread a certain amount of risk over many investors, and as the Sharpe ratio increases with the number of policies, the risk per shareholder decreases.