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chance of gain. For e.g, in case of a fire, a homeowner
stands to lose everything/something , but has no chance
of gain. So, in pure risks there is only the probability of
loss. The types of losses from pure risks are personnel
loss, property loss, net income loss, and legal liability
loss. Personnel losses for an individual includes death,
poor health, unemployment, and superannuation.

In 'Speculative ' risk, there is chance of both loss and
gain. The same homeowner has the speculative risk of
increase/decrease of property value over time. The most
well known speculative risk is gambling. Some of the
speculative risks like purchasing real estate property for
investment value or purchasing lottery tickets, may be
acceptable.

However, other speculative risks, such as large scale
gambling may not be acceptable because an individual
cannot withstand the financial outcome of possible loss.
In this case, the individual does not weigh the small
probability of a large gain with large probability of a
large loss. The risk of loss essentially gets transferred

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