Risk_Classifications_Flashcards

Question 1

What are static risks?

Answer 1

Static risks, such as earthquakes and floods, result from factors other than changes in the economy. They tend to occur with regularity and can be insured.

Question 2

What are dynamic risks?

Answer 2

Dynamic risks are the result of changes in the economy, such as changes in the business cycle or inflation. Insurance does not typically cover dynamic risks.

Question 3

What are fundamental risks?

Answer 3

Fundamental risks affect a large group of people. Examples include recessions and earthquakes.

Question 4

What are particular risks?

Answer 4

Particular risks affect individuals or small groups of people.

Question 5

What is pure risk?

Answer 5

Pure risk involves only the chance of loss or no loss, with no chance of gain. Pure risks are insurable.

Question 6

What is speculative risk?

Answer 6

Speculative risk involves both the chance of loss and the chance of gain. Speculative risks are not insurable.