This is the very foundation of insurance: by pooling resources and risks across a larger and more diverse group, the overall shock-absorbing capacity of the system increases. In this sense, risk sharing turns into risk reduction.
Take another example: tackling legacy issues by cleaning up banks’ balance sheets will increase trust between banks and facilitate cross-border lending, possibly even cross-border mergers, thereby fostering private risk sharing, independently of the discussion on how to progress with public risk sharing.