What does Risk Volatility mean? Read on to discover the definition & meaning of the term Risk Volatility - to help you better understand the language used in insurance policies.
A measure of the distance between an expected result and its standard deviation. The further this distance, the greater the volatility, and vice versa. For example, expected annual workers compensation losses for ABC Company are $1 million, and the standard deviation is $100,000 (i.e., 10 percent of $1 million). Expected losses for XYZ Company are also $1 million, but the standard deviation is $250,000, or 25 percent of $1 million. Therefore, XYZ Company's volatility is much higher than ABC's.
More Insurance Terms And Definitions
The Merriam-Webster Dictionary defines insurance as:
b: Coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.
c: The sum for which something is insured.
We hope the you have a better understanding of the meaning of Risk Volatility. If you are looking for the meanings of other important insurance terms and their definitions, just click on the letter below to find the words & concepts you are looking for: