Which type of risk may result in gain, loss, or no change in circumstance?

• A. Risk, Pure
• B. Risk Retention
• C. Risk Reduction
• D. Risk, Speculative

Answer: (D)

The correct answer is speculative risk because this type of risk encompasses circumstances where the outcome can lead to a gain, a loss, or no change at all. Speculative risks are typically associated with investments and entrepreneurial ventures, where the potential for profit or loss depends on various external factors and decisions made by individuals.

In contrast, pure risk involves situations that can only result in a loss or no change, such as natural disasters or accidents; there is no potential for gain involved. Risk retention refers to the strategy of accepting certain risks and dealing with the consequences rather than transferring those risks to insurance. Risk reduction involves measures taken to minimize the severity or likelihood of a loss, but it does not have the characteristic of potentially leading to a gain. Therefore, the outcomes associated with speculative risk clearly distinguish it from the other types of risk mentioned.