Pure risk presents which of the following outcomes?

Pure risk presents which of the following outcomes?

• A. Chance of loss
• B. Chance of gain
• C. Chance of both loss and gain
• D. No risk

Answer: (A)

Pure risk is defined by having only the possibility of a loss or no loss, with no opportunity for gain. Because of that, the outcome that pure risk presents is a chance of loss. Insurance is built on this idea, covering events where a loss could occur (like damage to property, injury, or death) but there’s no built-in chance of profit from the event itself. By contrast, opportunities for gain or for both loss and gain describe speculative risk, which isn’t the type of risk typically insured.

Pure risk is defined by having only the possibility of a loss or no loss, with no opportunity for gain. Because of that, the outcome that pure risk presents is a chance of loss. Insurance is built on this idea, covering events where a loss could occur (like damage to property, injury, or death) but there’s no built-in chance of profit from the event itself. By contrast, opportunities for gain or for both loss and gain describe speculative risk, which isn’t the type of risk typically insured.