MANAGEMENT

Detailed explanation-1: -A speculative risk has the potential to result in a gain or a loss. It requires input from the person looking to assume the risk and is therefore entirely voluntary in nature. At the same time, the result of a speculative risk is hard to anticipate, as the exact amount of gain or loss is unknown.

Detailed explanation-2: -Speculative risk is a category of risk that can be taken on voluntarily and will either result in a profit or loss. All speculative risks are undertaken as a result of a conscious choice.

Detailed explanation-3: -Gambling and investing in the stock market are two examples of speculative risks. Each offers a chance to make money, lose money or walk away even. Again, do not equate gambling and investing on any other level than as both being a speculative risk.

Detailed explanation-4: -Whereas pure risk is beyond human control and can only result in a loss if it occurs, speculative risk is risk that is taken on voluntarily and can result in either a profit or loss. Speculative risks are thus considered controllable risks.

Detailed explanation-5: -“Speculation” is an economic term used to describe financial risk taking. For example, an individual can engage in speculation by investing money in a new business venture where the outcome of profit or loss is unknown.