What is the key feature of pure risk?

Pure risk is defined by the presence of risk where there is only a possibility of loss and no chance of financial gain. In this context, individuals or entities face situations that can result in a loss but not a profit—examples include risks associated with natural disasters, theft, or accidents. This means that when someone engages in situations characterized by pure risk, they enter scenarios where the worst outcome would be some form of loss, whether monetary or material.

This concept is crucial in fields such as insurance, where policies are designed to protect against potential losses from these risks. Under pure risk, only the potential for negative outcomes exists, which distinguishes it from speculative risk, where there is both the potential for profit and the potential for loss. Hence, the defining trait of pure risk is its exclusive focus on potential loss without any possibility of gain.