What type of risks can only result in loss or no change?

Pure risk refers to situations where there is a possibility of loss or no change at all, with no opportunity for financial gain. This type of risk is often associated with events that can lead to financial loss, such as damage to property, liabilities from injuries, or other unforeseen incidents. In contrast to speculative risks, which can result in either a profit or a loss, pure risks do not provide any chance for profit; they solely encompass the potential for loss.

For example, if a homeowner's property is damaged by fire, the homeowner faces a pure risk—the risk of financial loss without any prospect of a gain. As a result, insurance often addresses pure risks, providing a safety net against losses that might occur. Hence, understanding pure risk is integral to risk management and insurance principles, as it guides the development and underwriting of policies designed to protect against specific liabilities and property losses.