Pure risk
It is a situation with a risk of loss with no opportunity for gain. These are conditions, including fires, natural disasters, and liability, where the need for insurance coverage is indicated as there is only the risk of loss with no possibility of beneficial gain.
Pure risk is a category that cannot be controlled and has two outcomes: complete loss or no loss. There are no opportunities for gain or profit when pure risk is involved.
Pure risk is generally prevalent in natural disasters, fires, or death. These situations cannot be predicted and are beyond anyone's control. Pure risk is also referred to as absolute risk. There are no measurable benefits when it comes to pure risk. Instead, there are two possibilities. On the one hand, there is a chance that nothing will happen or no loss at all. On the other, there may be the likelihood of total loss.
Pure risks can be divided into personal, property, and liability. There are four ways to mitigate pure risk: reduction, avoidance, acceptance, and transference. The most common method of dealing with pure risk is to transfer it to an insurance company by purchasing an insurance policy. Many instances of pure risk are insurable. For example, an insurance company insures a policyholder's automobile against theft. The insurance company has to bear a loss if the car is stolen. However, if it isn't stolen, the company doesn't make any gains
What Is Pure Risk? Definition, 2 Potential Outcomes, and Types. Investopedia. Retrieved from: https://www.investopedia.com/terms/p/purerisk.asp