Diversification Benefit
From Open Risk Manual
Revision as of 10:42, 24 September 2020 by Wiki admin (talk | contribs) (Replaced content with "== Definition == '''Diversification Benefit''' is the ''relative'' reduction of total risk by the aggregation of individual risks (Risk Diversification) that are not...")
Definition
Diversification Benefit is the relative reduction of total risk by the aggregation of individual risks (Risk Diversification) that are not identical (and hence will not all materialize in the same way). The reduction is relative to the nominal exposure of the total risk, which is increasing with the aggregation.
