What does the term "pure risk" refer to in insurable loss exposures?

The term "pure risk" specifically refers to situations where there is only the possibility of loss and no opportunity for financial gain. This concept is fundamental in insurance, as it aligns with the core principle of insurability, which focuses on protecting against unforeseen losses. For example, risks such as theft, fire damage, or natural disasters fall into the category of pure risk because they can cause financial setbacks but do not present any chance to profit from the occurrence.

In contrast, the other definitions relate to different types of risk that are not purely insurable. For instance, risks that involve the potential for financial gain or those tied to speculative investments create a scenario where a profit can be made, making them fundamentally different from pure risk. Similarly, risks that vary with market conditions involve elements of unpredictability beyond mere loss, further distancing them from the concept of pure risk as it pertains to insurable losses.