The Concept of Sharing Risks

Abstract

This chapter introduces the readers with the concept of sharing risk. A warranty contract is mutually adopted for the distribution of the negative outcome of a malfunctioning product affecting few among the entire population of the product's users. The warranty as a business practice has legal aspects, as the warranty is a form of contract, and also uses mathematical modeling based on evaluation of the probability of malfunctioning of the product over its lifetime. Misinforming added a new aspect on the risk in acquiring new products – the risk that the product doesn't behave as assumed by the client at the time of purchasing. The warranty of misinforming is a form to mitigate the risk of unsatisfaction by sharing the cost among the clients' population.