Question on risk, business, insurance, etc

[wacki]

What are some good examples of events that were very unlikely to happen yet the government or private entity spent a considerable amount of money preparing for it? For instance, somebody spent 20 million dollars trying to avoid an event that only had a 1% chance of actually occurring. Off the top of my head homeowners insurance is the biggest thing any private individual does. I guess those golfers that insure their wrists are pretty good examples as well.

[TomCollins]

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What are some good examples of events that were very unlikely to happen yet the government or private entity spent a considerable amount of money preparing for it? For instance, somebody spent 20 million dollars trying to avoid an event that only had a 1% chance of actually occurring. Off the top of my head homeowners insurance is the biggest thing any private individual does. I guess those golfers that insure their wrists are pretty good examples as well.

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War in Iraq?

[WordWhiz]

Terrorism in small towns. There's no reason to give Podunk, Iowa a $2,000,000 homeland security grant to buy a bioterror response unit or whatever. Although admittedly, some of this is just pork, not a legit belief that small town in middle America face a significant terrorist threat.

[Nielsio]

1% is not unlikely. I have fire insurance for much less likely events. Fire, all kinds of diseases/injuries, etc.

[Ricky_Bobby]

volcano insurance

[claimsguy]

Flood insurance. Check the FEMA website for more information. They have floodplain maps which show how likely a place may flood in a given amount of time.

[pvn]

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What are some good examples of events that were very unlikely to happen yet the government or private entity spent a considerable amount of money preparing for it?

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MAD

[Copernicus]

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What are some good examples of events that were very unlikely to happen yet the government or private entity spent a considerable amount of money preparing for it? For instance, somebody spent 20 million dollars trying to avoid an event that only had a 1% chance of actually occurring. Off the top of my head homeowners insurance is the biggest thing any private individual does. I guess those golfers that insure their wrists are pretty good examples as well.

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Ignoring absolute dollar levels, and just looking at relatively rare events that are insured against, completion bonds for major motion pictures and holes in one prizes in charity golf tournaments come to mind.

There are very few insurance markets where an insured event is so rare that there isnt a rational basis for establishing a fair premium.

[AlexM]

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volcano insurance

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According to my uncle who is a real whiz with volcanoes, a volcano is coming this way.

[madnak]

Aren't some scientists working on meteorite collisions?