Finance School of Management Risk and Resource allocation risk pooling and sharing/specialization in the bearing of risks By allowing people to reduce their exposure to the risk ofundertaking certain business ventures, the function of the financial systemto facilitate the transfer of risks may encourage entrepreneurial behavior that can have a benefit to society. uesTc25 Finance School of Management Risk and Resource Allocation ❖ risk pooling and sharing/specialization in the bearing of risks. ❖ By allowing people to reduce their exposure to the risk of undertaking certain business ventures, the function of the financial system to facilitate the transfer of risks may encourage entrepreneurial behavior that can have a benefit to society