Insurance

Core Foundations: Risk, Perils, and Hazards

• Definition of Risk:

  • Risk is defined as the chance of loss resulting from uncertainty.

  • It represents the vulnerability to an adverse financial deviation or impairment from an expected outcome.

• Primary Classifications of Risk:

  • Speculative Risk:

  • A category of risk where there exists a possibility of either financial gain or financial loss.

  • An example is investing in the stock market, where an investor may earn a profit or lose their invested capital.

  • Speculative risks are generally uninsurable because they are voluntarily