Intro texts normally explain that insurance firms (casinos, etc.) "work" by diversifying risk from many clients. Unsaid, then, seems to be that risk is bad for both firm and client.

But why should a firm even *need* such diversification, if they merely seek to maximize profits? Likewise why would a firm ever itself be a purchaser of insurance, or spend resources trying to "manage" risk? This seems to be a rather deep oddity in the basic picture we're taught from square one.