For terry roberts pure vs speculative risk (part 2)

Terry, continue this conversation. need 100 a word response from the previous post of yours. need it back tomorrow 12 March 

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your first post 

 

In my opinion, the insufficient insurance coverage will impact the profits negatively. If the number of people who are insured is large, the company will analyze statistically and know their real losses in a specific class. The insurance firm will function

profitably and also account for any claims that may arise. For example, most individuals contain auto insurance but just a few really get into an accident. You wage for the probability of the damage and for the guard that you will be compensated for losses in the occasion they happen.

 

I suggest that, the organization will recognize the identified risk as pure if it has occurrences where loss is the only outcome. The organization will also determine the speculative risk is occurrences have a gain or loss (profit or loss). One occurrence can cause one to turn to be the other since it is simple to mitigate for example stock in the market with money obtained from the deposits of clients,

 

professor’s reply

 

Nice post.  I like what you have here.  Your suggestion to pay close attention (my interpretation) to the possibility that circumstances might cause a pure risk to become a speculative risk. How often would you suggest each risk category be monitored?  Class, be on the lookout!  Thanks.