Which of the following is an example of risk sharing?

Risk sharing is a risk management technique in which a group combines resources so that losses experienced by a few are spread across many. The classic insurance concept behind this is pooling : each participant contributes money to a common fund, and the fund is used to pay covered losses as they occur. Option B describes this directly— pooling money to cover malpractice exposures —because malpractice losses can be unpredictable and potentially severe, and sharing them across a group reduces the financial impact on any one member.

The other options describe different risk management methods. Option A (not purchasing a car) is risk avoidance —eliminating the exposure entirely. Option C (installing sprinklers) is risk reduction/loss control , lowering the frequency or severity of loss. Option D (purchasing an insurance policy) is primarily risk transfer , shifting the financial consequences of specified losses to an insurer in exchange for a premium. Because only option B reflects spreading losses among a group through pooling, it is the best example of risk sharing .