Which of the following is NOT considered an element of an insurable risk?

An insurable risk is defined by certain characteristics that make it suitable for insurance coverage. Among these characteristics, pure risk, randomness, and substantial loss are all essential elements.

Pure risk involves situations where there are only two possible outcomes: loss or no loss. This is different from speculative risk, which includes the possibility of both profit and loss. Insurance is designed to cover situations where there's a chance of loss, making pure risk a fundamental aspect of insurable risks.

Randomness refers to how losses must occur in a manner that is not predictable. For an event to be insurable, losses must arise from random, unforeseen events rather than certain consequences of actions. This concept ensures that the risks being insured against are outside the control of the insured, aligning with the nature of insurance as a tool for managing unpredictable risks.

Substantial loss signifies that the financial impact of an insured event must be significant enough to justify insurance coverage. Insurers assess the potential loss to ensure that policies are underwritten based on quantifiable risks, further supporting the viability of insurance for the risk in question.

In contrast, speculative risk entails scenarios that involve uncertainty where there is a chance for gain or loss. This type of risk does not fit into the insurable risk model because insurance does