What type of risk involves both the chance of gain and loss and is typically not insurable?

Speculative risk is characterized by the potential for both gain and loss, making it inherently different from pure risk, which only involves the chance of loss. In the context of insurance, speculative risks are generally not insurable because they are associated with uncertainties that provide opportunities for profit, alongside the possibility of loss. This category includes activities like investing in stocks or starting a business, where the outcome can lead to financial gain or loss.

The nature of speculative risks means they are influenced by various market factors and individual decisions, which makes it difficult for insurance companies to predict and assess these risks reliably. As a result, they typically do not offer coverage for events that can lead to profit or loss, focusing instead on losses that cannot be avoided, such as accidents, natural disasters, or theft, which would fall under pure risks. Understanding the distinction between these types of risks is crucial for anyone involved in risk management, insurance, or financial planning.