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Dynamic and Static Risks

Speculative and Dynamic Risk

Dynamic risk is a condition where the profit or loss both are possible. Do not be confused, for example the conditions like investing in real estate, stocks, betting, etc. The result of speculative hazard can be profitable or loss, but most of the important thing that these types of hazards are uninsurable. Dynamic danger also includes the danger to invest in a new market, expand areas of operations, purchase new equipment and others.

Pure or Static Risk

Static risk is a condition, there are only possibilities of loss or no loss. The result of pure danger is only the loss or may be no loss, but it will never be beneficial. You can better understand the pure threat with the examples like occupational disability, premature death or medical expenses, property damage due to fire, flood and others. Three major types of hazards are included in pure risk which are liability, personal and property risk.

Personal risks are the type of risks that affect directly to an individual. The great example of the personal threat is poor health, unemployment, premature death or old age. This case of threat involves the possibility of additional expenses and loss of income.

Liability Risk is a type of pure risk. Liability hazard is of two types, that is a general liability and product liability risk. The difference between these types of dangers is that general liability hazard indicates the risk of the company’s procedures which are the reason behind of damage to the company’s employees or third parties and product liability hazard which specify to the danger of a product launched by the company and which can be the reason behind of damage to a person or property.

Property Risk is a type of danger which can be the reason of property damaged. Property can damage as the result of fire, hail, windstorm, or other causes.