Pure risk: only two outcomes, loss or no loss. There is no chance of gain. Examples: an illness, a disabling injury, a hospital stay, a fire. Insurers cover pure risks.

Speculative risk: you might gain or you might lose. Examples: buying stock, opening a new business location, gambling. Insurers do not cover speculative risk, because insurance indemnifies losses; it does not back ventures taken on in hope of profit.

Uncertainty alone does not make a risk speculative; the chance of gain does. A business faces pure risks too, such as an employee injury or a lawsuit.

Buying insurance does not remove the risk. A person with disability income insurance can still become disabled; the policy shifts part of the financial loss to the insurer. Risk can be managed but never eliminated completely (see STARR).