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Speculative Risk

What Does Speculative Risk Mean?

A speculative risk refers to something that cannot be predicted to yield a profit or a loss. It is, however, taken on by someone who is aware of the uncertainty. This type of risk is less likely to be insured.

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Insuranceopedia Explains Speculative Risk

When an outcome cannot be predicted but results from choices that a person makes of their own volition or free will, that risk is considered speculative. Someone who invests in stocks, for instance, invests in a speculative risk—they cannot possibly tell whether the price of stocks will go up or down. Another classic example of speculative risk is gambling—the gambler cannot tell for sure whether they will win or lose.

Because of its volatility, speculative risks are usually not covered by insurance.

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