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Lecture 2 - BMR 2101 Classification of Risk.pptx

Lecture 2 - BMR 2101 Classification of Risk.pptx - LECTURER...

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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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