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It's about distributing risk over a large group of people, whose behavior is collectively predictable.
Distributing risk throughout more borrowers such that the amount in loans that do pay off, counter losses from defunct borrowers, proves as an impetus for more lending at an individual level.
Lauta (2014a) identifies and attempts to address a conflict between the functions respectively of the stick and the carrot in distributing risk, blame and responsibility fairly and expeditiously in society.
Why join a pool of a few tens of millions when you can share the economies of distributing risk and cost with 300 million?
But it's hard, as Megan McArdle of The Atlantic notes, to see what these reforms had to do with rising house prices, the flood of foreign investment that fed the credit bubble and the global creation of complex new financial instruments for pricing and distributing risk.
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Rather than distributing risks, there was a pooling of risk in the largest financial institutions that made them very vulnerable and, because of their complex interconnections, very dangerous to the whole financial system.
These methods tend to assume either normality of the continuous risk indicator, the existence of a transformation function for non-normal distributed risk indicator into a normal distribution, or the estimated cut-off depends on a smoothing parameter by nonparametric methods like kernel smoothing.
He draws an analogy with the boom in structured finance, which saw banks distribute risk to specialist vehicles like conduits.
Primary insurers will not issue sufficiently large policies without reinsurance, which distributes risk for potentially huge liabilities such as those involved in a major oil spill.
It seems that there is only one large, universal threat that all Americans need to be protected against, and that distributed risk assessment has been replaced by equality of fear.
Many economists contend that speculation on oil futures is a good thing, because it increases liquidity and better distributes risk, allowing refiners, producers, wholesalers and consumers (like airlines) to "hedge" their positions more efficiently, protecting themselves against unseen future shifts in the price of oil.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com