What type of risk is characterized by the possibility of both loss and gain?

Speculative risk is characterized by situations where there is a chance of both loss and gain. This type of risk is associated with activities like investments or gambling, where the outcome can lead to either a profit or a loss, depending on various factors. For example, when investing in stocks, an investor may experience a financial gain if the stock value increases or incur a loss if the value decreases. This inherent uncertainty and potential for both outcomes distinguishes speculative risk from other types of risk.

In contrast, pure risk involves scenarios where there is only the potential for loss, without any possibility of gain, such as in the case of natural disasters, accidents, or illness. Independent risk is not a standard term used within risk management; thus, it doesn’t apply in traditional discussions of risk types. Insurable risk refers to risks that an insurance policy can cover, but it typically pertains to pure risks, as insurers usually do not provide coverage for speculative risks, given their uncertain nature.