What type of risk does insurance specifically aim to address?

Insurance is primarily designed to address pure risks. These are risks that involve the possibility of loss or no loss, but never the possibility of gain. For example, pure risks include scenarios such as natural disasters, theft, or accidents. These situations can lead to financial losses, and insurance helps mitigate those losses by providing financial protection and support in the event that such risks materialize.

In contrast, the other types of risks mentioned do not align with the core focus of insurance. Uncertain risks generally refer to risks where the probabilities of outcomes are unknown, but insurance operates on the principles of risk pooling and statistical modeling, which is more applicable to pure risks. Social risks involve societal issues, such as crime or poverty, which insurance does not directly address. Speculative risks, on the other hand, involve opportunities for gain as well as losses, such as investments in the stock market. These risks are not insurable through traditional means because they are fundamentally tied to chance and potential profit. Thus, insurance aims specifically at managing pure risks, providing coverage and support when losses occur.