Which type of risk represents a loss or no loss scenario?

The correct choice is pure risk because it is defined as a situation that presents only the possibility of loss or no loss, without the opportunity for gain. Examples of pure risk include potential damages from natural disasters, theft, or accidents. These risks do not provide any chance for financial gain; they are strictly focused on the potential for a negative outcome.

In contrast, speculative risk includes scenarios where there is a possibility of both loss and gain, such as investments or starting a new business. Business risk also relates to the potential for profit or loss inherent in the operations of a company and is tied to decisions that can lead to either positive or negative financial outcomes. Gambling risk involves elements of chance with potential wins; hence, it is also a type of speculative risk, where the outcome is uncertain, but the possibility of gain exists.

Understanding pure risk is crucial for agents and brokers as it shapes the insurance landscape, influencing the coverage options and policies available to clients who seek to manage these specific types of risks.