Excellent video! Understanding the two distinct risk categories that every firm faces at some time during its life cycle is very beneficial. Also, I believe that these ideas might be quite helpful in defining the various levels of risks that businesses today may encounter for our prospective missions.
Managing risk is an essential tool for any business to be successful. When examining trends for any forecasting you must first understand that in an experiment the variables are subject to change and depending on the change, we can see what percentage in the forecast is favorable and unfavorable and make informed business decisions. Great explanation using blackberry.
I think overall risk management is a treat that everyone should learn in their daily life, and I look at it as a necessity to live safer and smarter. The importance of risk management is very clear in business, as it grows, I think there are higher chances and possibilities to face an issue that if not for risk management, then would cause a lot of unwanted problems. I think according to your video and my understanding of the topic, learning this aspect will play a definitive role in our future, career-wise and personally. Sahand Ghorbani
Akeda.I (MRK 460 SCC) I like how simple and clear this explanation was, especially with the examples used. I feel like speculative risk is something that marketers should take every so often because this could potentially result in really great profit for the company. Although it is very risky as it can go both ways, sometimes taking a chance is a push necessary to see the results that you want.
This is finally a video that helped me understand a very complicated concept and understood it in less than 2 minutes. I get now that pure risk really means to think of the situation that would get you down to zero, like a tsunami, something that even if we tried, we might not get away from. A speculative risk would either have a good or a bad outcome and there is a chance for both to happen.
(Parth Rastogi MRK 460 SDD) The video gives great example of Pure risk, the explanation makes it very clear, about what it is. Speculative risk is a situation which can either result in a good or bad outcome. Thanks for sharing this video.
Not many people know how to manage a risky situation, and you presented it very well with excellent examples, as always. Do not forget to mention that I've never thought that a tornado could be a risk! My country doesn't have that many natural hazards. (Mahla Babaei, MRK 460SAA, Friday)
Thank you Professor Richardson for the great explanation. Another example of pure risk is your car gets stolen in the parking lot. In this case, you either lose the car and have to buy another one, or it didn't happen and you drive your car home. Pure risk features some chance of loss and no chance of gain. An example of speculative risk is purchase of shares. For instance If you invest in Apple Inc, you could either make or lose money depend on when you buy and sell your stock. Speculative risk features the chance to gain or lose. MGD426 Fall 2015 Benjamin Sin
Thank you for stating everything so clearly. I can tell the difference now. Pure risk, I believe, is beyond human control and can only end in a loss if it occurs, similar to a disease break such as Covid, whereas speculative risk is accepted willingly and can result in either a profit or a loss. The danger of loss exists in both speculative and pure risk but speculative risk, includes the chance of profit. Pooneh Kheiri-MRK460 SBB
I like how the Professor simply and directly differentiated between pure and speculative risk. Pure risk is identified with an event that if occurs will definitely have a negative impact on the company, whereas speculative risk there are chances of a positive and negative impact. The celebrity endorsement example brilliantly illustrated what speculative risk really is and depicted how speculative risk depends on a firm’s business decisions. However I believe with speculative risk there are essentially 3 outcomes not 2. Something good could come from it (+), something bad could happen (-), or nothing could happen it all (0). As the Prof mentioned, with pure risk there are two options, negative or neither positive nor negative. It seems as if mitigating pure risk is more important as there are greater chances of a negative income as there are only 2 possible outcomes - 50% chance of each outcome, whereas speculative risk there are 3 possible outcomes - 33.33% chance of each outcome making the probability of a negative effect low. However, the chances of a pure risk event occurring (such as a natural disaster) is much lower than the chances of a speculative risk occurring as speculative risk can depend on the many business decisions a firm makes. - Dilpreet Singh MGD426 (FALL 2014)
The video makes it very easy to understand the topic of Speculative risk and Pure risk. The prof. used very easy and day to day examples to explain both the topics. (Sahildeep Singh MRK460 SFF)
Hi prof, It is now very easy for me to understand the difference between speculative and pure risk after watching this short and informative video. Even if there are new terms like speculative risk in the course, It is easy to remember them for a long time through your videos. Thank you, professor. Jaskaran longia (MRK460 SFF )
I appreciate you describing the distinction between unadulterated risk and speculative risk, sir. The earthquake served as an excellent illustration of the difference between pure risk, which is outside of our control, and speculative risk, which can produce either a profit or a loss. Badat, Mohammed, MRK460SFF-
Great way to explain the difference between speculative risk and pure risk. It is very informative. You learn something new every day. Anamae - MRK 460 SFF (Thursday)
This video is helpful in our daily activities. Managing risk is essential for us to know since we can't avoid them to happen. Knowing the concept of speculative and pure risk helps me to prepare for any circumstance in life. Thank you for this informative video, Professor. - Keisha A. , Fri SAA
This is a great video that differentiates between the two types of risks. We learn that pure risk is related to incidents where there are no beneficial results. For example, there is the incident where ones home may be damaged due to a natural disaster which would be out of their control. However, steps such as purchasing home insurance would be ideal to lessen the risk. On the other hand, we learn that speculative risk involves the possibility of loss and gain or nothing happening. Therefore, in relation to companies, it is essential that they identify and evaluate all possible risks that the enterprise can confront and ways in which to mitigate them.
I like how you mentioned that pure risk is an incident that will ONLY impact organizations in a negative manner. And I think it's important to add why pure risk is different from speculative risk, because a pure risk is a risk that an individual cannot consciously take, where as a speculative risk you know that there is a 50/50 chance of you either gaining something out of this or losing something. And I agree with the individuals below, as they mention that the only way to really mitigate a pure risk is by purchasing insurance of some sort that can only reduce the severity of the risk. Where as a speculative risk you are accountable for your mistakes.
Thank you, professor, for the clarification. You have given real examples of speculative and pure risk, which is easier to observe. I think it is constructive to understand the risk of each situation so that we can manage and be proactive with solutions. Hang Pham, MRK469 SAA, Winter 2022.
The examples and comparisons between the two types of risks are great and make the two significantly more easy to distinguish between. Creating contingency plans to counter these potential risks and be prepared for them is also a great way to remain prepared for either best or worst case scenarios. Thank you again for these informative videos professor! Peter Korinis, MRK460SDD, Winter 2022
I think I understand the 2 types of risk and how to manage them. I think it is better to understand to compare both the negatives and the positives and to decide if the benefits outweigh the risks or vice versa. (kelvin Valentino MRK 460 SCC)
Watching this video just before exam has made it clear to me what to two concepts mean. Oh yes speculative risk is always used by the government of any country to judge any forth coming situation. Like in 2007, in Mumbai there was a forecast of heavy rains and government speculated that it wouldn't be so, resulting in a lot of damages since they were not prepared to handle such a situation. Sneha Varghese MRK460MV
I appreciate the informative video as it has helped me to understand the contrast between speculative and pure risk through the use of relevant examples and definitions. (SANIYA SGG)
Hearing this I remembered something I just read about Coca Cola's marketing campaing in which the product had printed names so people could find its name on them. This campaing was not welcomed in Israel because its cultural identity is tied up to religion and ethnicity, and it is kind of tricky. I would assume this is a speculative risk. Thank you Professor! Elidette O. MRK460SCC Summer 2022
I find it very useful to know the difference between speculative risk and pure risk. Also, it is very important to know how to manage them. MRK 460 SAA (Winter2021)
I think that speculative risk has never been more relevant than now, especially given the example. With the rise of social media and its utilization for marketing purposes, paying someone to promote products does not do it anymore. People want quality , purpose and the meaning. Thank you Tamara Muradova MRK460 SBB Summer 2021
Very informative video with good examples given. However, can you relate these concepts within a digital setting? For instance, what types of speculative or pure risks are introduced when managing an online store (for example Amazon)? I would like to hear your thoughts.
Thank you Professor for explaining everything clearly and letting me understand more about managing risk, speculative risk, and pure risk. And it's really helpful for my following assignment and my career in the future. (Sharon Young MRK460SBB)
In studying MGD426, analyzing the definition of both pure risk and speculative risk is critically important in understanding and categorizing where potential risk may fall under. In this way, companies are able to visualize and determine what risks are worth fighting for and what risks they should keep an eye on in the future. At the end of the day, the aspect that matters most, is the ability to avoid the loss or damage that a company may receive. The challenge associated with risk, is weighting out the the pros and cons in order to make the most appropriate choice for your business when assessing a risk. With this said, learning from your past mistakes with risk can allow you to better monitor and understand its impact on business operations. Anthony T MGD426 2014
Interesting video! Risk management is always important to consider whether something negative happens, it can greatly affect the overall company such as speculative risk but it can have its benefits if one were to use it positively by celebrity influencers to enhance sales by word of mouth. Speculative risks tend to be detrimental with cause and effect, the 50% chance of it negatively affecting it or positive. - Manish Rai, MRK460SDD
speculative risk can be good, bad or unchanging. while another name for pure risk is absolute risk because it can ONLY be negative (based on what I have gathered from this short video). great example is a building burning down. it's either it will (loss) or it remains the same! teachable point.
Ansar Orazalyyev MRK460 SDD Risk managment is very important, thank you for describing whole topic in 2 minutes video. Now i got an understanding of diffrerent types of risk, i really appreciate it and obviously will use it further in my life
Thank you for the insightful video! The examples and definitions provided help me gain a clear understanding of the differences between speculative and pure risk. -Daniella Snegirev (MRK460 SFF) Thursdays
This is really good video and i have never heard about Speculative risk but with this video i understand the main difference between pure risk and speculative risk with very good examples in terms of factories. Really appreciating video. Thank you for sharing with us .( Amanjot kaur MRK 460SCC)
Thank you for explaining it so vividly. so pure risk is just negative with no chance of profits for the firm and speculative risk can go either way. it can be positive or negative depending on the situation. Ghazal Mohammadi MRK460SAA
Speculative Risks are more often the not worth taking. They have a massive upside if all goes well and can benefit a company greatly. Mark Anthony Baldassarra Mrk 460 SDD
Inderpal Singh(Mrk460SDD)- It really helps us to understand the difference between speculative risk and pure risk. We can say the speculative risk is a cause and effect situation and you will get results from situations positively or negatively according to the situation happenings. On the other side, with pure risk, if nothing is going to be lost or damaged, it will not make any benefit.
I think this video does a great job at differentiating between the two streams of risks. I feel that even though companies will encounter speculative and pure risk at some point in their business cycle, they should be cognisant of the choices they make in order to produce a more favourable outcome. Companies/individuals can try to manage their risks to some extent through applying a more prudent mentality when in business, which in turn will help in assessing potential business or investing hazards. MGD426 2014
So something like investing in stocks would be considered a speculative risk, because it could go either way (meaning you could gain or lose a profit). A pure risk would be someone suing you company-the best case scenario is avoiding the lawsuit, but there is no inherent upside. Thanks for the clarification! Alex Morneau MRK460-MS
Simran(Mrk460ZSS) Thanks professor for explaining the difference between speculative risk and pure risk and the example about blackberry made it more easier.
Thank you SIr for explaining the difference between pure risk and speculative risk. The example of the tsunami made it evident that pure risk is something that's not in our control where as speculative risk is which would result in a profit or a loss. (Jaweria Qureshi MRK460 - SBB)
Very informative video that uses real-life examples for managing risk, speculative risk, and pure risk. I learned that risks can be positive such as speculative risk. Fernando Yu, MRK460SBB, Tues Section
(MRK460 SCC) Tun-Yu, Hsu This video helps us know the risk in the business. We have to the risk before we set up the business. However, the risk will be different in various businesses, so we have to prepare solutions and make good decisions to reduce the risk. Thank you, professor.
As an aside (for what it's worth), in project management speculative and pure risks take the form of known, unknown and 'known unknown' risks you may encounter when working on a project. In any event, they are occurrences you can either manage, anticipate, or do your best to prepare for. Brett - MGD426 2014
Hey Professor, Annie-May from your MRK460 SFF class. I didnt know that there was a thing called speculative risk prior to this video. I thought that the concept was very interesting and relevant to current marketing since celebrities now are constantly watched like hawks and most of the things they promote/like are paid sponsorship. I wonder though how many of those celebrities who do paid promotions actually use or like such products/services, but dont give their true opinion since it could cause risk to the companies that pay them.
To begin with, risk is defined as the possibility of loss or injury. Only pure risks are insurable because they involve only the chance of loss. They are pure in the sense that they do not mix both profits and losses. Speculative risks are not insurable. However, speculative risk involves the possibility of gain as well- even if there is no loss. A great example of speculative risk would be investing your money in the stock market. As oppose to insuring an auto-mobile is an example of pure risk. If the insured auto is involved in an accident, there is going to be some sort of damage or loss. However, if no accident occurs then there is a possibility of gain. Saleha Q ~ MGD 415
I agree with you Saleha, pure risks are insurable because in a way we can't prevent them from happening, but can control how much damage we can actually handle. As the example you mentioned about a car getting into an accident is a pure risk because there is only loss involved--insurance increases and damages to the car. However, for someone who is extremely rich, they might not consider it a pure risk because they can afford the high insurance and will just go and buy a brand new car. On the other hand, for someone who can't afford to be paying high insurance, would consider this to be a pure risk and would try to avoid getting into small accidents that would put them at loss. I guess what I'm trying to get at is that each type and level of risk is different for everyone and every business. As our guest speaker, George, said in class that it depends to what extent you are willing to go to safeguard your assets and how much risk you can handle. Once you know that, you can take the neccesary steps to mitigate those risks. Fatima K-MGD426
Another good example of speculated risk is investment activities, in relation to bonds. The outcome of the investment is uncertain. In simplest terms, you can either benefit from the investment or take a loss. Pure risk on the other hand is the opposite, in which a loss is the only possible outcome. Another example in regards to this concept is property. Where the risk would have to do with the possession of property an individual contains, being damaged or lost. Sabrina Chahal -- MGD426S
Ali Khosrowshahi - MRK460SCC Summer 2022: Very interesting that a risk can lead to a positive outcome (speculative risk). Great illustration with the Blackberry example.
This video helps us in understanding the meaning and types of risk and risk management in a very descriptive manner. The examples were spot on for clearing the concept. I can now easily understand the distinctions between speculative risk and pure risk. Thank you. (Deeksha, MRK460)
Instead of a comment, I have a question regarding the topic of pure and speculative risk. Is it fair or correct to categorize systemic risk (risk that cannot be diversified) as pure risk and non-systemic risk (risk that can be diversified) as speculative risk? ~~ Kaleab Mulatu, MGSC44
It was interesting to learn about two different types of risk. Speculative risk is the new type that I learnt from this video. The fact that risk can either be negative or positive is true. For example, if Will Smith's slap was staged, it would have been a speculative risk voluntarily taken by him. Either positive reaction such as "Wife Defender Award" or negative reaction "InFamous Slapper". Now, Will decision on taking the speculative risk did go both ways, however, negative reaction was much larger. Mirza Ayat-Ur Rahman, MRK460SDD, Winter 2022
Thank you professor for explaining and providing examples for the managing, speculative (situation) and pure risk(negative threat). Tashi Yangchen MRK460 ZSS
Owen Tubaro MRK460 SAA this video was very helpful is showing the different types of risks that companies could face when conducting business. This video allowed me to expand my understanding of this topic!
Thanks professor for the video, it was very helpful to understand the meaning of pure and speculative risk in a very easy way. Moreover, throughout the sequence of the video and your explanation of each type of risk I realized that both terms can even be applied in the real life. for example, speculative risk could be applied when people go to the casino, since they do not know what is going to happen, they would either lose their money or double it; or they could also neither lose nor win. Pure risk on the other hand can be applied when people drive since they could get a flat tire or their car may break down. therefore, the possible outcomes only affect negatively. Overall, it was a great explanation. (Bruno Alessandro Paez Gutierrez MRK460SDD SUMMER 2022.)
Managing risk is important for everyone, pure risk is beyond human control and can only result in loss. Whereas a speculative risk can either result in profit or loss (like gambling or investing in the stock market). Syed Muhammad Naqi, MRK460SEE, Monday 10:45am
This is a great video and it really helps to understand the two different types of risks that all businesses face at some point in their life cycle. Also, we can use this information towards our two upcoming assignments to define the levels of risks enterprises can face in the market today. Throughout all the courses taught by Professor Richardson, we have learned the importance of defining the 6 environments when a company is launching a product and developing contingency plans. The 6 environments helps companies define and ponder over the worst case scenarios and try to mitigate both speculative and pure risks. Fatima K-MGD426
Pure risk is if you win or lose you don't lose anything. Speculative risk is when you lose something it affects you in a negative manner, you lose something. Example of pure risk is if you miss an 8 am class you can easily go into the 3 pm class. Even though you missed the first class you didn't lose anything. Example of speculative risk is if you bet money on a website and you lose money. Dhruv Sarang MRK460MU
Its a great video! It really helps to understand the 2 different types of risks which are faced by all the businesses at some point in their life cycle. I also feel that these concepts can be very useful for our upcoming assignments in order to define the different levels of risks that can be faced by companies today. Bisma Ayyaz MGD 426 (Friday, 1-3pm) (Fall 2016)
Thank you for this video as it was quite helpful in going through risk management and the differences between speculative and pure risk. Pure risk can be described as an association with a situation that if transpires will lead to negative effects on a business. Now, with speculative risk, there can be a possibility of advantages and disadvantages that may occur leading to an impact. - Gabriella Rios MRK460SCC
Good morning Professor, A super informative video regarding the different types of risks. I always thought knowing about these risks was austere and required a lot of deep understanding but your videos made it look easy. I tried to know about these risks in different books and videos but could not really understand what exactly was Speculative Risk. But Thanks Professor for recording this video and helping me understand what I considered Hard. Uzair Arif (MRK460SD) Summer 2022
Its a great video! It really helps to understand the 2 different types of risks which are faced by all the businesses at some point in their life cycle. I also feel that these concepts can be very useful for our upcoming assignments in order to define the different levels of risks that can be faced by companies today. Harminder-kaur1 Mrk460SGG 2023
Thank you for breaking down the risks - I really enjoy the tornado analogy, it really helped me understand the topic more clearly. (Josh Alves - MRK460SGG)
Excellent video! Understanding the two distinct risk categories that every firm faces at some time during its life cycle is very beneficial. Also, I believe that these ideas might be quite helpful in defining the various levels of risks that businesses today may encounter for our prospective missions.
Managing risk is an essential tool for any business to be successful. When examining trends for any forecasting you must first understand that in an experiment the variables are subject to change and depending on the change, we can see what percentage in the forecast is favorable and unfavorable and make informed business decisions. Great explanation using blackberry.
I think overall risk management is a treat that everyone should learn in their daily life, and I look at it as a necessity to live safer and smarter.
The importance of risk management is very clear in business, as it grows, I think there are higher chances and possibilities to face an issue that if not for risk management, then would cause a lot of unwanted problems.
I think according to your video and my understanding of the topic, learning this aspect will play a definitive role in our future, career-wise and personally.
Sahand Ghorbani
Akeda.I (MRK 460 SCC)
I like how simple and clear this explanation was, especially with the examples used. I feel like speculative risk is something that marketers should take every so often because this could potentially result in really great profit for the company. Although it is very risky as it can go both ways, sometimes taking a chance is a push necessary to see the results that you want.
This is finally a video that helped me understand a very complicated concept and understood it in less than 2 minutes. I get now that pure risk really means to think of the situation that would get you down to zero, like a tsunami, something that even if we tried, we might not get away from. A speculative risk would either have a good or a bad outcome and there is a chance for both to happen.
(Parth Rastogi MRK 460 SDD)
The video gives great example of Pure risk, the explanation makes it very clear, about what it is. Speculative risk is a situation which can either result in a good or bad outcome. Thanks for sharing this video.
Thanks for sharing this video. - you are welcome
Not many people know how to manage a risky situation, and you presented it very well with excellent examples, as always. Do not forget to mention that I've never thought that a tornado could be a risk! My country doesn't have that many natural hazards. (Mahla Babaei, MRK 460SAA, Friday)
Thank you Professor Richardson for the great explanation. Another example of pure risk is your car gets stolen in the parking lot. In this case, you either lose the car and have to buy another one, or it didn't happen and you drive your car home. Pure risk features some chance of loss and no chance of gain. An example of speculative risk is purchase of shares. For instance If you invest in Apple Inc, you could either make or lose money depend on when you buy and sell your stock. Speculative risk features the chance to gain or lose.
MGD426 Fall 2015 Benjamin Sin
Thank you for stating everything so clearly. I can tell the difference now. Pure risk, I believe, is beyond human control and can only end in a loss if it occurs, similar to a disease break such as Covid, whereas speculative risk is accepted willingly and can result in either a profit or a loss. The danger of loss exists in both speculative and pure risk but speculative risk, includes the chance of profit.
Pooneh Kheiri-MRK460 SBB
I like how the Professor simply and directly differentiated between pure and speculative risk. Pure risk is identified with an event that if occurs will definitely have a negative impact on the company, whereas speculative risk there are chances of a positive and negative impact. The celebrity endorsement example brilliantly illustrated what speculative risk really is and depicted how speculative risk depends on a firm’s business decisions. However I believe with speculative risk there are essentially 3 outcomes not 2. Something good could come from it (+), something bad could happen (-), or nothing could happen it all (0). As the Prof mentioned, with pure risk there are two options, negative or neither positive nor negative. It seems as if mitigating pure risk is more important as there are greater chances of a negative income as there are only 2 possible outcomes - 50% chance of each outcome, whereas speculative risk there are 3 possible outcomes - 33.33% chance of each outcome making the probability of a negative effect low. However, the chances of a pure risk event occurring (such as a natural disaster) is much lower than the chances of a speculative risk occurring as speculative risk can depend on the many business decisions a firm makes.
- Dilpreet Singh MGD426 (FALL 2014)
The video makes it very easy to understand the topic of Speculative risk and Pure risk. The prof. used very easy and day to day examples to explain both the topics. (Sahildeep Singh MRK460 SFF)
Hi prof,
It is now very easy for me to understand the difference between speculative and pure risk after watching this short and informative video. Even if there are new terms like speculative risk in the course, It is easy to remember them for a long time through your videos. Thank you, professor.
Jaskaran longia (MRK460 SFF )
Glad to hear that
I appreciate you describing the distinction between unadulterated risk and speculative risk, sir. The earthquake served as an excellent illustration of the difference between pure risk, which is outside of our control, and speculative risk, which can produce either a profit or a loss.
Badat, Mohammed, MRK460SFF-
Great way to explain the difference between speculative risk and pure risk. It is very informative. You learn something new every day.
Anamae - MRK 460 SFF (Thursday)
This video is helpful in our daily activities. Managing risk is essential for us to know since we can't avoid them to happen. Knowing the concept of speculative and pure risk helps me to prepare for any circumstance in life. Thank you for this informative video, Professor. - Keisha A. , Fri SAA
This is a great video that differentiates between the two types of risks. We learn that pure risk is related to incidents where there are no beneficial results. For example, there is the incident where ones home may be damaged due to a natural disaster which would be out of their control. However, steps such as purchasing home insurance would be ideal to lessen the risk. On the other hand, we learn that speculative risk involves the possibility of loss and gain or nothing happening. Therefore, in relation to companies, it is essential that they identify and evaluate all possible risks that the enterprise can confront and ways in which to mitigate them.
I like how you mentioned that pure risk is an incident that will ONLY impact organizations in a negative manner. And I think it's important to add why pure risk is different from speculative risk, because a pure risk is a risk that an individual cannot consciously take, where as a speculative risk you know that there is a 50/50 chance of you either gaining something out of this or losing something. And I agree with the individuals below, as they mention that the only way to really mitigate a pure risk is by purchasing insurance of some sort that can only reduce the severity of the risk. Where as a speculative risk you are accountable for your mistakes.
Thank you, professor, for the clarification. You have given real examples of speculative and pure risk, which is easier to observe. I think it is constructive to understand the risk of each situation so that we can manage and be proactive with solutions.
Hang Pham, MRK469 SAA, Winter 2022.
The examples and comparisons between the two types of risks are great and make the two significantly more easy to distinguish between. Creating contingency plans to counter these potential risks and be prepared for them is also a great way to remain prepared for either best or worst case scenarios. Thank you again for these informative videos professor!
Peter Korinis, MRK460SDD, Winter 2022
I think I understand the 2 types of risk and how to manage them. I think it is better to understand to compare both the negatives and the positives and to decide if the benefits outweigh the risks or vice versa. (kelvin Valentino MRK 460 SCC)
Watching this video just before exam has made it clear to me what to two concepts mean. Oh yes speculative risk is always used by the government of any country to judge any forth coming situation. Like in 2007, in Mumbai there was a forecast of heavy rains and government speculated that it wouldn't be so, resulting in a lot of damages since they were not prepared to handle such a situation.
Sneha Varghese MRK460MV
I appreciate the informative video as it has helped me to understand the contrast between speculative and pure risk through the use of relevant examples and definitions. (SANIYA SGG)
Hearing this I remembered something I just read about Coca Cola's marketing campaing in which the product had printed names so people could find its name on them. This campaing was not welcomed in Israel because its cultural identity is tied up to religion and ethnicity, and it is kind of tricky. I would assume this is a speculative risk. Thank you Professor! Elidette O. MRK460SCC Summer 2022
I find it very useful to know the difference between speculative risk and pure risk. Also, it is very important to know how to manage them.
MRK 460 SAA (Winter2021)
great video! short and to the point
I think that speculative risk has never been more relevant than now, especially given the example. With the rise of social media and its utilization for marketing purposes, paying someone to promote products does not do it anymore. People want quality , purpose and the meaning.
Thank you
Tamara Muradova
MRK460 SBB
Summer 2021
Very informative video with good examples given. However, can you relate these concepts within a digital setting? For instance, what types of speculative or pure risks are introduced when managing an online store (for example Amazon)? I would like to hear your thoughts.
Thank you Professor for explaining everything clearly and letting me understand more about managing risk, speculative risk, and pure risk. And it's really helpful for my following assignment and my career in the future. (Sharon Young MRK460SBB)
In studying MGD426, analyzing the definition of both pure risk and speculative risk is critically important in understanding and categorizing where potential risk may fall under. In this way, companies are able to visualize and determine what risks are worth fighting for and what risks they should keep an eye on in the future. At the end of the day, the aspect that matters most, is the ability to avoid the loss or damage that a company may receive. The challenge associated with risk, is weighting out the the pros and cons in order to make the most appropriate choice for your business when assessing a risk. With this said, learning from your past mistakes with risk can allow you to better monitor and understand its impact on business operations. Anthony T MGD426 2014
Interesting video! Risk management is always important to consider whether something negative happens, it can greatly affect the overall company such as speculative risk but it can have its benefits if one were to use it positively by celebrity influencers to enhance sales by word of mouth. Speculative risks tend to be detrimental with cause and effect, the 50% chance of it negatively affecting it or positive. - Manish Rai, MRK460SDD
speculative risk can be good, bad or unchanging. while another name for pure risk is absolute risk because it can ONLY be negative (based on what I have gathered from this short video). great example is a building burning down. it's either it will (loss) or it remains the same! teachable point.
Ansar Orazalyyev MRK460 SDD
Risk managment is very important, thank you for describing whole topic in 2 minutes video. Now i got an understanding of diffrerent types of risk, i really appreciate it and obviously will use it further in my life
" thank you for describing whole topic in 2 minutes video", well, to be honest - if you take too long to get to the point, people lose interest
Thank you for the insightful video! The examples and definitions provided help me gain a clear understanding of the differences between speculative and pure risk.
-Daniella Snegirev (MRK460 SFF) Thursdays
This is really good video and i have never heard about Speculative risk but with this video i understand the main difference between pure risk and speculative risk with very good examples in terms of factories. Really appreciating video. Thank you for sharing with us .( Amanjot kaur MRK 460SCC)
Thank you for explaining it so vividly. so pure risk is just negative with no chance of profits for the firm and speculative risk can go either way. it can be positive or negative depending on the situation.
Ghazal Mohammadi MRK460SAA
Speculative Risks are more often the not worth taking. They have a massive upside if all goes well and can benefit a company greatly.
Mark Anthony Baldassarra Mrk 460 SDD
Inderpal Singh(Mrk460SDD)- It really helps us to understand the difference between speculative risk and pure risk. We can say the speculative risk is a cause and effect situation and you will get results from situations positively or negatively according to the situation happenings. On the other side, with pure risk, if nothing is going to be lost or damaged, it will not make any benefit.
I think this video does a great job at differentiating between the two streams of risks. I feel that even though companies will encounter speculative and pure risk at some point in their business cycle, they should be cognisant of the choices they make in order to produce a more favourable outcome. Companies/individuals can try to manage their risks to some extent through applying a more prudent mentality when in business, which in turn will help in assessing potential business or investing hazards. MGD426 2014
So something like investing in stocks would be considered a speculative risk, because it could go either way (meaning you could gain or lose a profit). A pure risk would be someone suing you company-the best case scenario is avoiding the lawsuit, but there is no inherent upside. Thanks for the clarification!
Alex Morneau
MRK460-MS
This also ties into contingency planning and countermeasures. Always be prepared depending on either forms of risks.
Bankole A- MGD426
Simran(Mrk460ZSS)
Thanks professor for explaining the difference between speculative risk and pure risk and the example about blackberry made it more easier.
Thank you SIr for explaining the difference between pure risk and speculative risk. The example of the tsunami made it evident that pure risk is something that's not in our control where as speculative risk is which would result in a profit or a loss. (Jaweria Qureshi MRK460 - SBB)
Very informative video that uses real-life examples for managing risk, speculative risk, and pure risk. I learned that risks can be positive such as speculative risk.
Fernando Yu, MRK460SBB, Tues Section
(MRK460 SCC) Tun-Yu, Hsu
This video helps us know the risk in the business. We have to the risk before we set up the business. However, the risk will be different in various businesses, so we have to prepare solutions and make good decisions to reduce the risk. Thank you, professor.
Welcome Donny
As an aside (for what it's worth), in project management speculative and pure risks take the form of known, unknown and 'known unknown' risks you may encounter when working on a project. In any event, they are occurrences you can either manage, anticipate, or do your best to prepare for.
Brett - MGD426 2014
Hey Professor, Annie-May from your MRK460 SFF class. I didnt know that there was a thing called speculative risk prior to this video. I thought that the concept was very interesting and relevant to current marketing since celebrities now are constantly watched like hawks and most of the things they promote/like are paid sponsorship. I wonder though how many of those celebrities who do paid promotions actually use or like such products/services, but dont give their true opinion since it could cause risk to the companies that pay them.
To begin with, risk is defined as the possibility of loss or injury. Only pure risks are insurable because they involve only the chance of loss. They are pure in the sense that they do not mix both profits and losses. Speculative risks are not insurable. However, speculative risk involves the possibility of gain as well- even if there is no loss. A great example of speculative risk would be investing your money in the stock market. As oppose to insuring an auto-mobile is an example of pure risk. If the insured auto is involved in an accident, there is going to be some sort of damage or loss. However, if no accident occurs then there is a possibility of gain. Saleha Q ~ MGD 415
I agree with you Saleha, pure risks are insurable because in a way we can't prevent them from happening, but can control how much damage we can actually handle. As the example you mentioned about a car getting into an accident is a pure risk because there is only loss involved--insurance increases and damages to the car. However, for someone who is extremely rich, they might not consider it a pure risk because they can afford the high insurance and will just go and buy a brand new car. On the other hand, for someone who can't afford to be paying high insurance, would consider this to be a pure risk and would try to avoid getting into small accidents that would put them at loss. I guess what I'm trying to get at is that each type and level of risk is different for everyone and every business. As our guest speaker, George, said in class that it depends to what extent you are willing to go to safeguard your assets and how much risk you can handle. Once you know that, you can take the neccesary steps to mitigate those risks.
Fatima K-MGD426
Another good example of speculated risk is investment activities, in relation to bonds. The outcome of the investment is uncertain. In simplest terms, you can either benefit from the investment or take a loss. Pure risk on the other hand is the opposite, in which a loss is the only possible outcome. Another example in regards to this concept is property. Where the risk would have to do with the possession of property an individual contains, being damaged or lost.
Sabrina Chahal -- MGD426S
Ali Khosrowshahi - MRK460SCC Summer 2022: Very interesting that a risk can lead to a positive outcome (speculative risk). Great illustration with the Blackberry example.
My name is Omer Yonis, MRK460MMS. Very interesting! I never new these terms before. Thank you for the beneficial videos you post.
Thank you for discussing the difference between speculative risk and pure risk. Very informative. Eric D'Ambrosi (MRK460 SFF - Thursdays)
This video helps us in understanding the meaning and types of risk and risk management in a very descriptive manner. The examples were spot on for clearing the concept. I can now easily understand the distinctions between speculative risk and pure risk.
Thank you. (Deeksha, MRK460)
" I can now easily understand the distinctions between speculative risk and pure risk." great
Instead of a comment, I have a question regarding the topic of pure and speculative risk. Is it fair or correct to categorize systemic risk (risk that cannot be diversified) as pure risk and non-systemic risk (risk that can be diversified) as speculative risk?
~~ Kaleab Mulatu, MGSC44
It was interesting to learn about two different types of risk. Speculative risk is the new type that I learnt from this video. The fact that risk can either be negative or positive is true. For example, if Will Smith's slap was staged, it would have been a speculative risk voluntarily taken by him. Either positive reaction such as "Wife Defender Award" or negative reaction "InFamous Slapper". Now, Will decision on taking the speculative risk did go both ways, however, negative reaction was much larger.
Mirza Ayat-Ur Rahman, MRK460SDD, Winter 2022
Thank you professor for explaining and providing examples for the managing, speculative (situation) and pure risk(negative threat). Tashi Yangchen MRK460 ZSS
Owen Tubaro MRK460 SAA this video was very helpful is showing the different types of risks that companies could face when conducting business. This video allowed me to expand my understanding of this topic!
Yes Saleha..good point
Thanks professor for the video, it was very helpful to understand the meaning of pure and speculative risk in a very easy way.
Moreover, throughout the sequence of the video and your explanation of each type of risk I realized that both terms can even be applied in the real life. for example, speculative risk could be applied when people go to the casino, since they do not know what is going to happen, they would either lose their money or double it; or they could also neither lose nor win. Pure risk on the other hand can be applied when people drive since they could get a flat tire or their car may break down. therefore, the possible outcomes only affect negatively. Overall, it was a great explanation. (Bruno Alessandro Paez Gutierrez MRK460SDD SUMMER 2022.)
Managing risk is important for everyone, pure risk is beyond human control and can only result in loss. Whereas a speculative risk can either result in profit or loss (like gambling or investing in the stock market).
Syed Muhammad Naqi, MRK460SEE, Monday 10:45am
clear definitions provided. Thank you. (Zihan Li MRK460 SCC)
This is a great video and it really helps to understand the two different types of risks that all businesses face at some point in their life cycle. Also, we can use this information towards our two upcoming assignments to define the levels of risks enterprises can face in the market today. Throughout all the courses taught by Professor Richardson, we have learned the importance of defining the 6 environments when a company is launching a product and developing contingency plans. The 6 environments helps companies define and ponder over the worst case scenarios and try to mitigate both speculative and pure risks.
Fatima K-MGD426
Pure risk is if you win or lose you don't lose anything. Speculative risk is when you lose something it affects you in a negative manner, you lose something. Example of pure risk is if you miss an 8 am class you can easily go into the 3 pm class. Even though you missed the first class you didn't lose anything. Example of speculative risk is if you bet money on a website and you lose money.
Dhruv Sarang MRK460MU
Its a great video! It really helps to understand the 2 different types of risks which are faced by all the businesses at some point in their life cycle. I also feel that these concepts can be very useful for our upcoming assignments in order to define the different levels of risks that can be faced by companies today.
Bisma Ayyaz
MGD 426 (Friday, 1-3pm) (Fall 2016)
Thank you professor for sharing the amazing information. You explained clear and in a very simple way. Jasmeen Kaur MRK460SCC
Thank you for this video as it was quite helpful in going through risk management and the differences between speculative and pure risk. Pure risk can be described as an association with a situation that if transpires will lead to negative effects on a business. Now, with speculative risk, there can be a possibility of advantages and disadvantages that may occur leading to an impact.
- Gabriella Rios MRK460SCC
Good morning Professor,
A super informative video regarding the different types of risks. I always thought knowing about these risks was austere and required a lot of deep understanding but your videos made it look easy. I tried to know about these risks in different books and videos but could not really understand what exactly was Speculative Risk. But Thanks Professor for recording this video and helping me understand what I considered Hard.
Uzair Arif (MRK460SD) Summer 2022
Excellent, thanks for the feedback, glad it was useful
Its a great video! It really helps to understand the 2 different types of risks which are faced by all the businesses at some point in their life cycle. I also feel that these concepts can be very useful for our upcoming assignments in order to define the different levels of risks that can be faced by companies today.
Harminder-kaur1
Mrk460SGG 2023
Thank you for breaking down the risks - I really enjoy the tornado analogy, it really helped me understand the topic more clearly. (Josh Alves - MRK460SGG)
Yes Saleha..good point