Which type of risk is characterized by the chance of losing money, but not of gaining?

The type of risk characterized by the chance of losing money, but not of gaining, is pure risk. Pure risk involves situations where there are only two possible outcomes: either there is a loss or there is no loss at all. This type of risk typically relates to events such as accidents, natural disasters, or theft, where the individual can only sustain a loss and does not have the potential for a gain.

In the context of insurance, pure risk is insurable because it allows for the transfer of risk from an individual to an insurance company. For example, if someone experiences a fire that results in property damage, they can file a claim to recover their losses, but there is no financial gain associated with that situation.

Other types of risk, such as speculative risk, involve the potential for both gain and loss, making them uninsurable under traditional insurance policies. Investment risk, while sometimes overlapping with pure risk in certain situations, focuses more on the variability of returns from investments and includes the possibility of gaining money. This distinction is important in understanding how insurance operates and the types of risks that are covered.