What types of risks are not always covered by insurance?

Catastrophic cases and speculative risk are types of risks that are often excluded or not fully covered by insurance policies. Catastrophic risks refer to large-scale events, such as natural disasters, that can result in significant losses. While some insurance policies do provide coverage for specific catastrophic events, there may be limitations or exclusions based on the nature and scale of the event, the terms of the policy, or the category of risk itself.

Speculative risks involve uncertain outcomes that can lead to either profit or loss, such as investments in stocks or launching a new business venture. Insurance generally does not cover speculative risks as they are not considered insurable risks – insurers typically cover only pure risks, which have potential losses but no opportunity for gain.

Therefore, recognizing that both catastrophic cases and speculative risk fall outside the protective scope of traditional insurance coverage is crucial for understanding risk management in business settings. This distinguishes these types of risks from operational, strategic, market, credit, regulatory, and compliance risks, which may have more structured policies or are addressed through different risk management strategies.