- Risk: The possibility of incurring a loss.
- Economic Risk: A type of risk that occurs in a financial loss.
- Non- Economic: A type of risk that may result in the embarrassment or inconvenience without financial impact.
- Pure Risk: A type of risk that is a threat of a loss without an opportunity for a gain.
- Speculative Risk: A type of risk that offers the chance to Experience a gain or loss.
- Controllable Risk: A type of risk that occurs when conditions can be controlled to lessen the chance of harm.
- Uncontrollable Risk: A type of risk that cannot be controlled or reduced by actions.
- Insurable Risk: A type of risk that meets the criteria of of an insurance company for coverage.
- Uninsurable Risk: A type of risk that the possible amount of loss is simply unpredictable.
Example of Types of Risk
- Economic: Fred's diner occurred a financial loss due to a fire.
- Non- Economic Risk: Requesting customers to move to another check- out lane.
- Pure Risk: Frost damages your strawberry patch.
- Speculative Risk: Mary opened a shoe store that only operated for six months.
- Controllable Risk: Will travels to school on a motorcycle wearing a jacket, and helmet.
- Uncontrollable Risk: You can control your driving but not other people's driving.
- Insurable Risk: The owner purchased liability insurance for his/her business.
- Uninsurable Risk: A competitor of Staples, an office supply store, moved across the street.
Ways that Businesses manage risk
- Avoid: Decline to engage in a particular activity.
- Transfer: Insure the risk.
- Insure: Allow someone else to assume the risk.
- Assume: Finish the activity and and accepting full responsibility.