What type of risk involves the possibility of a loss or gain?

The type of risk that involves the possibility of a loss or gain is speculative risk. This form of risk is characterized by the potential for both positive and negative outcomes, distinguishing it from pure risk, which only entails the chance of loss. Speculative risk is commonly seen in investment activities where one might engage in ventures that can yield profits or result in losses, such as stock trading, entrepreneurial ventures, or gambling.

In contrast, pure risk is limited to situations that result in loss without any potential for profit, like the risk of natural disasters damaging property. Systematic risk refers to risks inherent to the entire market or market segment that cannot be mitigated through diversification, while financial risk typically deals with the uncertainties regarding financial instruments or operations. Thus, speculative risk is uniquely identified by the dual nature of its outcomes involving both loss and gain.