Pure Risk vs Speculative Risk

Examples of Speculative Risks

-Almost all types of investments -GAMBLING - Remember

Define Pure Risk.

A category of risk in which loss is the only possible outcome; there is no beneficial result. Out of Risk takers control. Loss or No loss

# 1 method of handling Pure Risk

Avoidance

# 2 method of handling Pure Risk

Control -Loss Prevention -Loss Reduction

# 3 method of handling Pure Risk

Retention

Define Speculative Risk

Risk that results in an uncertain degree of gain or loss. All speculative risks are made as conscious choices and are not just a result of uncontrollable circumstances. -Loss -No loss -GAIN

# 4 method of handling Pure Risk

Transfer -Ex: One can buy insurance to protect homeowners