Page 135 - RISK Management IC 86

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the stricken areas. Most important of such resources are
fire fighting materials and equipments.

(d) Business of Speculative Risk- When the outcome of a
risk is either a loss or a profit, the risk may be either a
loss or profit, the risk is called speculative risk. Various
business risks are all speculative risks.

Most pure risks are insurable, but speculative risks are
not. In the absence of any uncertainty, the earnings of
the company would have been limited to wages for
managing the business plus any monopoly profits.

Q5. Discuss (a) legal and (b) practical issues involved
in the transfer of risk by contract conditions.

Ans.a) The transfer of the financial consequences of injury,
loss or damage from one party to a contract to the
other party by means of clauses in the contract, is a
common practice. Eg, in hotels, restaurants, sales
invoices etc.

To be effective, such clauses have to form part of a legally
binding contract and the party seeking to take advantage
of the clause, should have brought it to the

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