How does insurable risk differ from other types of risks?

Insurable risk is characterized by its ability to be quantified and predicted, making option B the correct choice. This is essential for insurance companies, as they need to assess the likelihood of an event occurring to set premiums and determine coverage. Insurable risks typically follow a statistical basis, allowing insurers to analyze historical data and use it to make informed predictions about future claims.

For instance, when underwriting a life insurance policy, an insurer evaluates various factors such as age, health status, and lifestyle choices to predict the risk of death during the policy term. This ability to quantify and predict risk helps in establishing a balanced insurance portfolio and maintaining financial stability for the insurer.

In contrast, other types of risks may not be quantifiable or predictable, making them unsuitable for insurance coverage. Factors such as market risk or political risk can be highly volatile and influenced by numerous unpredictable variables. This distinction is crucial for understanding why only specific risks can be effectively insured.