The pool of risks must be genuinely diversified, so that only a small proportion of policyholders will be making claims at any one time.
Compensation would help to ensure that everyone enjoyed true equality of opportunity.One way to help the genetically unfortunate would be to force insurance companies to insure them and, indeed, to make everybody buy life insurance, in order to ensure that companies have a large enough pool of risks.
Insurance and insurance rates are usually designed around the idea of a pool of risk -- the chance that a few members of a group will have high claims that can be covered by the premiums paid by everyone else.
For bankers and brokers, Wall Street is not so much a place as perhaps a dream (or, last year, a nightmare): a churning pool of risk, debt, credit, and information that is best realized in the physical world as the blinking screen of a Bloomberg terminal.
So you've got to get out of your front door, get out of the comfort and quiet of your home, and your safety zone, and step into a pool of risk where you have no idea what the outcome is going to be.
Rather, it is an attribute that thrives on indigenous resources, such as the ease of doing business, vibrant capital markets and, most importantly, a local talent pool of risk-takers.
In lieu of restructuring the fundamental financial model of the commercial production business and reducing incentives for the pool of risk capital so seriously that nothing except "bean-counter bankable" fodder could be green-lit, they are apparently discussing how each side sees the future with 2007 eyes.
"The process towards the issuance of common debt should be criteria-based and phased, whereby progress in the pooling of decisions on budgets would be accompanied with commensurate steps towards the pooling of risks," the document says.
Such a scheme differs from a social insurance scheme in that each worker usually has his own personal account from which he or she can draw if certain contingencies arise; there is no pooling of risks among members as there is in a social insurance scheme.
"In democracies, it is parliaments and not central banks that should decide on such a comprehensive pooling of risks".
Pooling of risks within a community will vary along a spectrum covering two dimensions [ 22].
