Which type of risk includes possible loss but also the potential for profit?

Speculative risk is characterized by situations where there is the potential for both loss and gain. This type of risk is common in investments, where individuals or companies may engage in actions that could lead to profit as well as the risk of financial loss. For example, investing in the stock market involves the chance of either making money if the stock price rises or losing money if it falls.

In contrast, pure risk refers only to situations that can result in loss without the opportunity for financial gain, such as risks associated with natural disasters or accidents. Operational risk involves losses resulting from inadequate or failed internal processes, people, and systems, whereas strategic risk pertains to potential losses due to factors impacting an organization's overall strategy, such as market competition or shifts in consumer preferences. Thus, speculative risk is unique in its dual potential for both profit and loss, distinguishing it from the other types.