Pure Risks and Speculative Risks

Let us have a close look at Pure and Speculative risks:

The latter are in the nature of betting or gambling where the risk is, to some extent, under the control of the person concerned, while a picture is not so. It is more in the nature of an Act of God. Insurance deals with only pure risks and not speculative risks.

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Critical or Catastrophic risks, Financial and Non-Financial Risks

Let us have a close view about Critical or Catastrophic risks, Financial and Non-Financial Risks:

Critical or Catastrophic risks are those which may lead to the bankruptcy of the owner. It would happen if this total, like in tsunami, wiping out everything. It can also happen if the deceased person was heavily in debt. Important risks may bot spell doom, but may upset family or business finances bdaly, requiring a lot time to recover. The adverse effects of an economic recession is one such. Less damaging are Unimportant risks, life temporary illness or accidents.

Finalcial and Non-Financial Risks:

Insurance is concerned only with financial risks

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Classification of Risks in our Daily Life

Risks are classified into various types based on the damage to be caused. If we understand this then we can know when to take the insurance for our assests and for our lives:

Risks are classified in various ways:-

Critical or Catastrophic risks

Financial or Non-Financial risks

Dynamic and Static risks

Fundamental risks

Pure and Speculative risks

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