What does Optimization mean? Read on to discover the definition & meaning of the term Optimization - to help you better understand the language used in insurance policies.
The formal process by which decisions are made under conditions of uncertainty. Components of an optimization risk modeling exercise include a statement of the range of decision options, a representation of the uncertain conditions (usually in the form of probability distributions), a statement of constraints (usually in the form of limitations on the range of decision options), and a statement of the objective to be maximized (or minimized). An example of an optimization exercise is an asset allocation study.
We hope the you have a better understanding of the meaning of Optimization.