The essence of pooling is risk sharing, to spread losses incurred by the few over the entire group. The purpose of this process is to reduce the volatility in possible outcomes as usually measured by the standard deviation, i.e. deviation from the expected value of outcome. For example, assume that 2 ship owners, A and B, each own a ship with identical goods to be ferried valued at $10 million. There is a 10% chance that each ship will be attacked by pirate which results in total loss of the goods, and that an attack to either ship is an independent event. Ship owner B proposes to A to share the total loss of the 2 ships equally, no matter what happens to which ship in the voyage, i.e. pooling the risk. Below is the standard deviation of A’s loss under the 2 scenarios (to reject or to accept the proposal).