Speculative Risk

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Speculative Risk Speculative risk is a category of risk that can be taken on voluntarily and will either result in a profit or loss. Almost all financial investment activities are examples of speculative risk, because such ventures ultimately result in an unknown amount of success or failure. Speculative Risk has three possible outcomes; something good (gain), something bad (loss) or nothing (staying even). Gambling and investing in the stock market may let to one of the three. Speculative risk are uninsurable because there is a lot of uncertainty about an event under consideration that could produce either a profit or a loss, for example gambling transaction. Almost all business activities and ventures qualify as speculative risks, from opening a new location to adding new items to the stock. As such, insurance companies will not directly insure the business’ profit. However, commercial insurance may cover the building, stock, equipment and other physical properties required to do business. Lifestyle actions are also considered minor speculative risks. For example, one may take a job with the speculation that it will provide financial gain. Unemployment, on the other hand, would be a pure risk because the outcome could only be financial loss without the prospect to gain anything. To reduce the financial loss of unemployment, people pay into unemployment insurance. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

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