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If all risk managers want to predict the frequency of accidents involving all three machines that...

If all risk managers want to predict the frequency of accidents involving all three machines that they have in the factory, how will the law of large numbers apply to each of the three machines?

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The law of large numbers produces the most accurate predictions under unchanging conditions. Therefore, in the Gibson Manufacturing scenario, the most accurate predictions can be made for Machine A because Gibson has five years of loss experience with the same machine and the same operators. The fact that Machine B will have a new, inexperienced operator is a change of conditions that could make loss forecasts less accurate for that machine. Gibson has no data on which to base the loss experience for the new, improved Machine C.

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