Which type of risk involves only the possibilities of loss or no loss?

The type of risk that involves only the possibilities of loss or no loss is known as pure risk. Pure risk refers to situations where there is a chance of a loss but no possibility of financial gain. This contrasts with speculative risk, which involves the potential for both loss and gain, such as investment opportunities in the stock market.

In pure risk scenarios, you might encounter risks associated with natural disasters, accidents, or theft, where the outcomes are limited to either suffering a loss (like property damage) or experiencing no loss at all. Common examples of pure risk include insurance claims related to fire or health—events that could result in loss but do not offer the prospect of profit.

Understanding pure risk is fundamental in insurance and risk management contexts, where policies are often designed to mitigate these types of losses. This distinction is essential for accurately assessing risk in various situations.