5.02 Types of Risk
Elizabeth Rivera
Risk
The possibilities of incurring loss.
Ex: not to expose your money to too much risk.
Economic Risk
Results in financial loss. There's Personal Risk, Property Risk, and Liability Risk.
Ex: Fred's Diner incurred a loss due to a fire.
Non- Economic
Loss of wages, medical bills, and damaged to property.
Ex: A farmer consuming his own crops.
Pure Risk
Loss is the only outcome; there is no beneficial result.
Ex: A earthquake hit and damaged your house.
Speculative Risk
Opposite of pure risk.
Ex: Buying stock in the market. (don't know if its going to go up or down)Controllable Risk
Something you can control/ do something about it.
Ex: Transfer some/ all.
Uncontrollable Risk
Risks that are not controlled.
Ex: New competitor near by.
Insurable RIsk
Meets the ideal criteria for efficient insurance.
Ex: Highly possibility for a tornado
Uninsurable Risk
A hazard/ condition that has either a high likelihood of loss,/ which the insurance would be considered against the law.
Ex: Person suffering for a terminal illness.