Risk exposures can be primarily classified into which two categories?

Risk exposures are categorized primarily into two main types: pure risk and speculative risk. Pure risk refers to situations that present a possibility of loss or no loss, with no chance of gaining anything. Common examples include risks associated with natural disasters, theft, or injury, where the outcome can only result in a loss or neither gain nor loss.

On the other hand, speculative risk involves scenarios where there is a chance of loss, gain, or neither. This type of risk is commonly associated with investments in stocks or other financial instruments, where market fluctuations can result in economic outcomes that either increase or decrease an investor's capital.

Understanding the distinction between pure and speculative risks is crucial in risk management and insurance. Insurers typically cover pure risks because they can be quantified and managed effectively. In contrast, speculative risks are generally not insurable since they involve uncertain outcomes that can result in both potential profit and loss.

The other options refer to specific domains of risk management but do not encompass the broader classification framework of risk exposures as effectively. Systematic and unsystematic risk focus on investment portfolios, while operational and financial risk pertain to specific business operations and financial transactions. Market and credit risks are also specific categories, primarily within the context of financial markets and lending. None