Texas All Lines Adjuster Practice Test

What type of risk does not include the possibility of gain?

1. Speculative risk

2. Pure risk

3. Elemental risk

4. Transitional risk

The correct answer is: Pure risk

The correct answer is pure risk, which refers to situations where there is a chance of loss or no loss, but no opportunity for financial gain. Pure risk is typically associated with unavoidable events such as natural disasters, accidents, or death. In these scenarios, an individual or organization can only face losses or remain unaffected; they cannot profit from these events. On the other hand, speculative risk involves situations where there is both a possibility of loss and a potential for gain, such as investing in stocks or starting a business. Elemental risk pertains to risks that arise from natural events affecting a large population, while transitional risk is typically associated with the changes brought about by moving from one condition to another—like transitioning organizations. These types of risks often involve variable outcomes, including the potential for positive returns, distinguishing them from pure risk.