Which of the following describes speculative risk?

Speculative risk refers to situations where there is a possibility of loss or gain. This type of risk is inherent in actions taken for investment purposes, where individuals or companies might invest money with the hope of making a profit, but they also face the risk of losing their investment. Unlike pure risk, which only involves the potential for loss without the chance to gain, speculative risk embodies both potential outcomes, making it a unique category of risk.

In contrast, the other options do not accurately describe speculative risk. The chance of loss only pertains to pure risks, where the possibility of gain does not exist. The idea that speculative risks are completely insurable is misleading because, while some speculative risks may be insured (like certain business ventures), many cannot be effectively insured due to their uncertain nature. Finally, risks based solely on natural disasters are more aligned with pure risks, as they typically lead to loss without a counterbalancing chance for a gain. Understanding these distinctions is crucial in the field of insurance and risk management.