Which type of risk involves activities that could lead to either a gain or a loss?

The type of risk that involves activities that could lead to either a gain or a loss is known as speculative risk. Speculative risks are characterized by the possibility of gaining (profit) or losing (loss) as a result of various activities or decisions. Examples of speculative risks include investing in stocks, starting a new business, or gambling, where the outcomes can vary significantly, and individuals seek the potential for profit alongside the chance of loss.

In contrast, pure risk involves scenarios that can only result in a loss or no loss, such as the risk of fire damaging a property or the potential for an accident without any possibility of gain. Hazard risk refers specifically to risks that arise from known hazards, typically leading to a loss, and is often insurable. Insurable risk pertains to risks that meet certain criteria, making them suitable for coverage by insurance, but does not inherently refer to the possibility of gain.

Understanding the distinction between speculative risk and other types of risk is essential for anyone involved in risk management or insurance practices, as it helps in assessing opportunities that may also involve uncertainty.