Research of the Application of Large Numbers Law on Insurance Risk Management

Risk management is the risk to risk identification, risk estimation, risk evaluation, risk control, decision-making and action to reduce the negative impact of process risk. With the social development and scientific and technological progress, in real life more and more risk factors. People come up with all sorts of ways to cope with risk. But no matter what method, the general principle is a risk management: the minimum cost for maximum protection. Law of large numbers is an important basic law for insurance business. Law of large numbers of homogeneous risk is among a large share of the insurance unit similar to the theory of the firm economies of scale. Economies of scale of production and operational costs apportioned law of large numbers are risk of dispersion. Scale requires the insurance business is to maintain the financial stability of the insurance company an important condition.