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Stratification Of Losses

Definition of "Stratification of losses"

Justin Stewart
  McCarson Realty Inc.

Technique of breaking down the various losses as a whole into useful components called subsets (strata) so that no subset is overrepresented. The result is the classification of losses according to dollar amount in order to predict the probabilities of various degrees of loss severity so that the organization can adopt the proper risk management techniques.

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