Page 27 - EBOOK RISK MANAGEMENT

3.0 RISK IDENTIFICATION

3.1 Risk Identification

Risk can be classified into two categories. Firstly, pure and speculative risk. Next is

fundamental and particular risk. The identification of loss exposure which designed

to develop information on sources of risk, hazard, perils and exposure to potential
losses. There are many risks that surround individuals and businesses which include

personal risks, property risks, liability risks and financial risks.

3.2 Classification Of Risk

3.2.1 Pure and Speculative Risks

Pure risk
•Only possibilities of loss or no loss
•No chance of gain
•Not all pure risks are insurable
•Example: bodily injuries in car accident, loss
due to burglary

Speculative Risk
•There is possibilities of loss, no loss or gain
•Non-insurable (risk cannot be covered by
insurance)
•Example: investment decisions, gambling

Figure 3.1 Pure Risk versus Speculative Risk

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