Retrieving "Risk Pooling" from the archives
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Risk
Linked via "pooling"
Pure Risk vs. Speculative Risk
Pure Risk involves a situation where only two outcomes are possible: loss or no loss. There is no possibility of gain. Examples include natural disasters, premature death, or property damage. Insurers primarily deal with pure risks, as they are statistically amenable to aggregation and pooling.
Speculative Risk, conversely, entails exposure where both gain and loss are possible. [Financial speculation](/entries/financial-speculati…