Risks that include natural disasters and criminal or terrorists acts are

Risks that include natural disasters and criminal or terrorists acts are

• A. Speculative Risks
• B. Operational Risks
• C. External Risks
• D. Pure Risks

Answer: (D)

Pure risks are those with only the possibility of loss or no loss, with no opportunity for a gain. Natural disasters and criminal or terrorist acts fit this because they can cause damage or harm, but there isn’t a scenario where the event yields a financial benefit. They’re typically external in origin, but the key trait is the lack of any upside—only potential loss. That’s why they’re categorized as pure risks. By contrast, speculative risks involve potential for both gain and loss (like investing), which isn’t the scenario described here.

Pure risks are those with only the possibility of loss or no loss, with no opportunity for a gain. Natural disasters and criminal or terrorist acts fit this because they can cause damage or harm, but there isn’t a scenario where the event yields a financial benefit. They’re typically external in origin, but the key trait is the lack of any upside—only potential loss. That’s why they’re categorized as pure risks. By contrast, speculative risks involve potential for both gain and loss (like investing), which isn’t the scenario described here.