Which of the following best describes pure risk?

Pure risk is best described as a situation that presents only the possibility of loss or no loss, without any opportunity for gain or profit. This concept is fundamental to the understanding of risk in insurance and finance, distinguishing it from speculative risk, where both loss and gain are possible.

In this context, pure risk encompasses scenarios such as natural disasters, health issues, and accidents. These are risks that can lead to financial loss but do not create opportunities for earning a profit. Recognizing this characteristic is essential for both individuals and organizations when evaluating insurance needs or risk management strategies.

The options that do not align with the definition of pure risk include scenarios that imply the potential for profit, such as voluntary activities that may introduce risk for gain or suggest that such risks can be entirely managed or mitigated through proactive measures, which are characteristic of speculative risks.