Incoprea Theory
Vol. XXXI · 129

Theory 96/Diversification reduces risk

Diversification Adds Links

The claim

Diversifying suppliers adds links that each carry their own failure probability, so resilience improves only if failures are uncorrelated.

01Mechanism

Correlated supplier risk means diversification adds exposure without protection.

02Prediction

Resilience should improve only with geographic dispersion.

03Refutation

Improvement independent of correlation would remove the condition.