MANAGEMENT

Detailed explanation-1: -Speculative risk is a risk situation that presents a chance for gain, in addition to the chance of loss. Speculative risks are NOT insurable. Why? Insurance companies only want to provide protection in situations where there is a chance of loss only, and no chance for gain (pure risk).

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: -A speculative risk has the potential to cause a loss or gain.