BRM 2101 - MUMO
1
Classification of Risks
When you have finished this section, you should be able to do the
following:
Differentiate between pure risk and speculative risk
Differentiate between fundamental and particular risk
Describe the categories into which pure risk may be
subdivided
LECTURER 2
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2
Classification of Risks—Risk Exposures
Pure versus Speculative Risk Exposures
Risk professionals often differentiate between pure
risk that features some chance of loss and no chance
of gain (e.g., fire risk, flood risk, etc.) and those they
refer to as speculative risk. Speculative risks feature a
chance to either gain or lose (including investment
risk, reputational risk, strategic risk, etc.)
Using the Venn diagram on slide 3, the right-hand side
focuses on speculative risk while the left-hand side
represents pure risk.
The
simultaneous
consideration
of
pure
and
speculative risks within the objectives range is an
approach to managing risk, which is known as
enterprise risk management (ERM).
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- Spring '18
- DR Mensah
- Economics, Actuarial Science, ISO 31000, Risks—Risk Exposures
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