Risk Pool (Financial Risk Management)

Risk pool is the technique which is used in financial risk management. In insurance sector, it can be practically used. All insurance companies make group for facing high risky projects like floods, earthquakes, fire and major health problems. If insurance companies make this risk pool in insurance market, they can reduce the risk. They share profit or loss in insurance sector. Suppose, if A co. creates risk pool with other three companies B and C. Then, if loss occurs, it can be easily shared among all these insurance companies, if loss does not occurs, they can share profit. With this, these companies can reduce unbearable deficit. Even private insurance companies can create with government insurance companies. By making risk pool, capacity to cover loss can easily be increased from 75% to 150%.

Yesterday, JS online reported that People with health problems who can't buy insurance on their own may soon have some additional options under the new federal law of USA overhauling the health care system. The law allocated $5 billion to set up a high-risk pool, such as the existing Wisconsin Health Insurance Risk-Sharing Plan, that would subsidize the cost of health insurance for people with pre-existing medical conditions.