What characterizes a 'pure risk'?

A 'pure risk' is characterized by its potential outcomes that involve only two scenarios: a loss or no loss, without the possibility of financial gain. This concept is fundamental in risk management because pure risks are typically associated with events such as natural disasters, theft, injury, or other unforeseen occurrences that can result in a negative impact, but do not offer an opportunity for profit. Understanding this distinction is essential for professionals who manage risk, as pure risks are often mitigated through strategies like insurance and risk management techniques, focusing solely on loss prevention and the financial implications of potential losses.

The other options do not accurately describe pure risk. For instance, a risk that can lead to financial gain pertains more to speculative risks, which involve opportunities for both loss and profit, thus differing fundamentally from the nature of pure risk. Likewise, while some risks can be predictable and controllable, not all pure risks fit this description. The notion of speculation on market performance describes a considerably different category of risk where the outcomes are intertwined with investment strategies and profit potential, further separating it from the concept of pure risk.