What type of risk transfer involves pooling resources to mitigate losses for a defined group?

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The correct answer is insurance, as it fundamentally involves pooling resources to help mitigate losses for a defined group. This risk management method allows individuals or businesses to pay premiums into a collective fund, which can then be used to cover expenses arising from unforeseen events such as accidents, illnesses, or property damage. By sharing the risk among a large group of people, insurance helps ensure that the financial burden of losses is manageable for individuals, as the overall risk is distributed across all participants.

Hedging, on the other hand, involves taking positions in financial instruments to offset potential losses in investments, rather than pooling resources. Speculation refers to taking on risk in financial investments with the hope of achieving a profit, and saving is focused on accumulating funds over time, typically for future use, rather than transferring risk. Therefore, the concept of risk transfer that primarily focuses on resource pooling for loss mitigation uniquely aligns with the principles of insurance.