What is the primary feature distinguishing pure risk from speculative risk?

The primary feature that distinguishes pure risk from speculative risk lies in the outcomes each type of risk presents. Pure risk is characterized by scenarios that can only result in a loss or no change; there are no opportunities for financial gain. Examples of pure risks include events such as natural disasters, theft, or fire that could cause damage or loss but do not present a chance of profit.

On the other hand, speculative risk involves situations where there is the potential for both gain and loss, such as investing in the stock market or starting a new business. Because pure risk only considers potential losses or neutral outcomes, the defining characteristic is that it lacks the possibility of financial gain, which is crucial for understanding its nature and how it is treated in insurance and risk management contexts.