Texas All Lines Adjuster Practice Test

Which type of risk is characterized by the potential for gain, loss, or no change?

1. Pure risk

2. Speculative risk

3. Saturated risk

4. Negligent risk

The correct answer is: Speculative risk

The correct choice identifies speculative risk, which is characterized by the possibility of gain, loss, or no change. This type of risk involves situations where outcomes are uncertain and can lead to various results, including profit, loss, or a neutral outcome. Examples include investing in stocks, starting a business, or gambling. In contrast, pure risk only involves the potential for loss and no opportunity for gain. This encompasses scenarios like natural disasters or theft, where the only potential outcome is damage or loss of assets, with no chance of making a profit. The other options, saturated risk and negligent risk, are not standard categories in risk management literature. Saturated risk might refer to a market condition, rather than a type of risk per se, while negligent risk implies potential liability arising from negligent actions rather than the broader concept of potential outcomes associated with various risk situations.