Scroll Top


    Speculative Risk

    What is a Speculative Risk?

    Speculative risk is a risk category, which results in an uncertain degree of gain or loss when undertaken. All theoretical risks are made as deliberate decisions and are not merely the product of uncontrollable circumstances. The speculative risk is the contrast of pure risk (the possibility of a failure only and no gain potential) because there is some chance of a gain or a loss.

    Nearly all investment practices entail such speculative risks because an investor has no idea of whether an investment is going to be a dazzling success or a complete disaster. Some assets, such as contract options, bear a mix of investment risk and risk you can hedge.

    Analysing Speculative Risk

    Some investments are speculative in comparison with others. Investing in government bonds, for example, has much less investment risk than investing in junk bonds as government bonds have far smaller default risk. In many cases, the higher the speculative risk, the higher the profit or return potential on the investment.

    A speculative risk has the potential to cause a loss or gain. It requires input from the person who is looking to take the risk and is, therefore, voluntary. At the same time, it is hard to anticipate the result of speculative risk, since the precise amount of gain or loss is unknown.

    Alternatively, different factors, such as company history and market trends when buying stocks, are used to estimate gain or loss potential.

    Speculative Risk As Opposed to Pure Risk

    Pure risk includes circumstances where the only outcome is a failure, as opposed to the theoretical risk. Typically speaking, these kinds of threats are not taken on knowingly and are out of investor control instead.

    Pure risk is most widely used in assurance required assessment. For example, in an accident, if a vehicle is damaged, there's no possibility that the outcome will be a benefit. Since the result of the event can only lead to a loss, it's a pure risk.

    Popular Topics

    Latest Articles

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use


    ISO 27001

    Data Center


    SSL Certified Site

    128-bit encryption