An insurance pool covers 1,000 households, each with a 5% chance of loss. Based on these probabilities, it is estimated that 55 to 60 households will experience some form of loss each year. Risk management techniques need to be applied to determine the expected value of the total losses for the year and the overall risk faced by the insurance pool across the 1,000 households.

1. Insurance pools 1,000 households with a 5% chance of loss. It was estimated that 55 to 60
houses experience some form of loss in a year. Apply your risk management techniques to
determine the following
1-expected value of the loss
2-objective risk of the area covered
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