What defines pure risk in the context of risk management?

Pure risk refers to uncertainties that present only the possibility of loss or no loss, with no opportunity for profit. In risk management, pure risks encompass scenarios that are typically out of human control, such as natural disasters, accidents, or health-related incidents. These risks can lead to a situation where the only possible outcomes are negative, meaning that individuals or organizations face the potential for financial loss or negative impacts without any corresponding chance for gain.

Understanding pure risk is crucial for risk management because it allows businesses and individuals to identify, evaluate, and mitigate the risks that can adversely affect their operations or well-being. Pure risks are often insurable, as they present identifiable and quantifiable hazards that can be statistically analyzed to assist in creating appropriate mitigation strategies.

The other options describe various types of risks but do not accurately capture the essence of pure risk. For example, some options reference risks with potential for profit, which aligns more with speculative risks rather than pure risks, emphasizing the absence of any positive outcomes in pure risk scenarios.