A Sudden Increase In The Price Of Electricity Resulting From Increased Demand For Power An Increase In Interest Rates That Results In A Firm Paying More To Borrow An Increase In Energy Prices That Increases Operating Costs For An Airline None Of The Above 6. Both speculative risk and pure risk involve the possibility of loss. All speculative risks are undertaken as a result of a conscious choice. C) A stock market venture is an example of a pure risk. Pure risks are a loss only or at best a break-even situation. Speculative risks on the other hand are a family of risks in which some possible outcomes are beneficial. For example, should a person damage a car in an accident, there is no chance that the result of this will be a gain. is a method for spreading individual risk among a large group … Pure risk, is two sided - it's something that only EVER has a downside - no upside, AND, it's completely out of your control. Fundamental risks … Pure risk. 3 Types of Risk in Insurance are Financial and Non-Financial Risks, Pure and Speculative Risks, and Fundamental and Particular Risks. Pure risk is most commonly used in the assessment of insurance needs. Examples of Everyday Risk. A commercial risk register example might be that a company decides it’s time to expand its operations and take on a new warehouse space. Which of the following is not an example of a pure risk? The risk may be that it takes on too much space, and the noted solution to this risk could be that it only uses half the space for the time being and does a temporary subleasing of the other half for a company that needs additional space for a limited time. Speculative Risk vs. In pure risk, for example - a car meet with an accident or it may not meet with an accident. A risk, in a business context, is anything that threatens an organization's ability to generate profits at its target levels. a. Tue Apr 14, 2015 12:54 pm Pure Risk – risk with potential loss only Potential loss of a home by fire b. In order to understand why, you will need to understand the difference between the two. Tue Apr 14, 2015 12:05 pm What is the difference between pure risk and business risk.> Can you explain with example? Pure risks are those risks where only a loss can occur if the event Speculative risk, is something that potentially has an upside - like when you buy stock, in the stock market. Architectural Risk The risk that your architecture will fail to meet business objectives. co. coolpmp69 Contributor. may result in gain or loss because of changing economic condition. For example, if you buy a new textbook, you face the prospect of the book being stolen or not being stolen. Distinguish between Pure risk and Speculative risk on the following basis: asked Apr 11, 2018 in Class XI Business Studies by priya12 ( -12,631 points) natureofbusiness The perils covered by traditional property-casualty (P&C) insurance products are within the realm of event risk. However, speculative risk also involves the possibility of gain as well - even if there is no loss. In other words a speculative risk is a situation that might also end in a gain. Investing in the stock market is an example of a speculative risk. 5. Example 172,570 people in America were diagnosed with lung cancer in 2005, a year in which there were approximately 290,000,000 Americans, yielding an absolute risk … Posts: 282 Joined: Mon Nov 17, 2014 8:55 pm. Answer to 17. The house will enjoy a year with nothing bad occurring or there will be damage caused by a covered cause of loss (fire, wind, etc.). 4. If the teenager chooses to invite her friends over she is taking a risk of getting in trouble with her parents. Risk of loss associated with fortuitous occurrences (e.g., fires, hurricanes, tortuous conduct). So far we have been dealing with speculative risks –all investment risks are speculative risks, in that one can either gain or lose as a result In this unit we will deal with pure risks. may result in either gain or loss. For example, you fail to deliver goods to your retail locations on time for customers. A) Uncertainty regarding financial loss is the definition of risk; therefore, it is characteristic of both pure and speculative risks. For example, if a home is destroyed in some sort of natural disaster, the homeowner incurs a loss that cannot be offset, even if the property where the home once existed is eventually sold. 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