Austin Hemphill


  • 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

  1. Avoid: Decline to engage in a particular activity.
  2. Transfer: Insure the risk.
  3. Insure: Allow someone else to assume the risk.
  4. Assume: Finish the activity and and accepting full responsibility.