Which of the following best describes pure risk?

The definition of pure risk is centered around the potential for loss or no loss occurring, without the possibility of gaining a profit. In the context of risk management, pure risk is often associated with situations such as property damage, liability, and health-related incidents, where the outcomes are limited to adverse events or the absence of those events.

This distinction is important in insurance and risk management because it differentiates pure risk from speculative risk, which includes the possibility of both gains and losses. Speculative risks are related to investments and business ventures, where there can be financial gain as well as the potential for loss. Therefore, the focus on the potential for loss or no loss in the correct answer effectively captures the essence of pure risk.

The other options describe broader types of risk that incorporate elements beyond the strict confines of pure risk. For instance, the possibility of profit or loss encompasses speculative risks rather than exclusively focusing on losses. Additionally, risks that affect many people at once and risks related to economic events introduce complexities that are not characteristic of pure risk, which is concerned solely with negative outcomes.