What does the concept of "risk-sharing" aim to achieve?

The concept of "risk-sharing" aims primarily at the reduction of individual exposure to risk. This approach involves distributing the burden of risk among multiple parties, which can lead to a lower financial impact for each involved entity if an adverse event were to occur.

By sharing risks, organizations can mitigate the potential consequences that they would face alone, making it an effective strategy for managing uncertainty. For example, businesses might enter into partnerships, insurance schemes, or joint ventures where they agree to take on certain risks together, thereby minimizing their individual risk profile.

The other options do not align with the fundamental goals of risk-sharing. The complete elimination of risk is generally unachievable; even in risk-sharing arrangements, some level of risk remains. Although some might perceive that risk-sharing might lead to increased costs, effective risk management strategies ultimately aim to reduce overall costs related to risk exposure. Additionally, risk-sharing is intended to manage and reduce risk rather than enhance it through collaboration.