MANAGEMENT

Detailed explanation-1: -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-2: -Insuring Against Pure Risk Unlike most speculative risks, pure risks are typically insurable through commercial, personal, or liability insurance policies. Individuals transfer part of a pure risk to an insurer. For example, homeowners purchase home insurance to protect against perils that cause damage or loss.

Detailed explanation-3: -Key Takeaways Assuming speculative risk is usually a choice and not the result of uncontrollable circumstances. Pure risk, in contrast, is the potential for losses where there is no viable opportunity for any gain.

Detailed explanation-4: -Pure risk, also known as absolute risk, is insurable. Speculative Risk: Three possible outcomes exist in speculative risk: something good (gain), something bad (loss) or nothing (staying even). Gambling and investing in the stock market are two examples of speculative risks.