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What is objective risk and what are the methods that an insurance company can use to...


What is objective risk and what are the methods that an insurance company can use to reduce objective risk?
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Answer #1

Objective risk are observed number of losses within a certain time frame for a particular sample. It is related to making future projections of risk using the past performance of the company related to various risk.

Standard deviations and variance are method used to calculate the chances of objective risk by various insurance companies in order to determine the risk associated with their business and the losses associated to them in advance.

These standard deviations and variances are used to take the performance of the company and ascertain a mean by averaging them out and then it is used to calculate the chances of the objective risk by ascertainment of the probability and the likelihood of the deviations &variances.

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