J
JoeKing
Member
Hi,
I'm struggling to understand why we underestimate the variability when we look to combine our risks and there is correlation but are effected by similar events, legal, claims handling team and data issues versus the fact that we have diversification benefits when combining these segments of risk and so the variance of the sum of the risk is greater than the sum of the standalone risks.
Could somebody explain how the two sections tie in together please?
Much appreciated.
Kind Regards,
Joe
I'm struggling to understand why we underestimate the variability when we look to combine our risks and there is correlation but are effected by similar events, legal, claims handling team and data issues versus the fact that we have diversification benefits when combining these segments of risk and so the variance of the sum of the risk is greater than the sum of the standalone risks.
Could somebody explain how the two sections tie in together please?
Much appreciated.
Kind Regards,
Joe