What is cumulative risk mean?

Answer 1

It means that Suppose that a random event occurs, on the average, once every 100 years. The risk (or probability) that this event will occur in any 10-year period is:

Risk = 1 - [1 - 1/(R.I.)]n
= 1- [1 - 1/(100)]10
= 1 - [0.99]10 = 0.096 (or 9.6%)

Similarly, we can calculate the cumulative risks for various other time periods (for R.I. = 100):

TIME PERIOD (n) [1 - 1 / (R.I.)]n CUMULATIVE RISK 20 years 0.82 18% 25 years 0.78 22% 69 years 0.50 50% 100 years 0.37 63%