What type of risk is typically not insurable?

Speculative risk refers to situations that carry the potential for both gain and loss, such as investing in stocks or starting a business. These risks are contingent on uncertain outcomes and are fundamentally different from insurable risks, which typically involve only the possibility of loss. Insurance is designed to mitigate losses from risks that are definite and measurable, such as natural disasters or accidents. Speculative risks, on the other hand, represent entrepreneurial activities where the outcome can lead to either profit or loss and are typically not able to be insured against because they involve voluntary choice and the prospect of gain.

In contrast, insurable risks precisely define events or circumstances that can be covered by insurance policies, the pooling of risk involves gathering similar risks to manage them collectively, and property risk generally pertains to the physical loss of or damage to property, which can all be insured against. Thus, the nature of speculative risk makes it unsuitable for traditional insurance coverage.