Which type of risk is typically faced by a large number of people?

The correct choice highlights a crucial concept in the field of insurance, particularly regarding risks that can be managed through coverage. Insurable risks are those that can be measured, predicted, and pooled among a large number of people. This characteristic allows insurance companies to create a collective risk pool, thus enabling them to charge premiums and pay out claims.

Insurable risks often involve scenarios where the outcomes can lead to financial loss, but not gains. For example, the risk of fire damage to a home is insurable because it affects a large segment of the population, and its occurrence can be statistically estimated over time. This aligns well with the nature of risk pooling in insurance, which relies on the law of large numbers to minimize individual uncertainty and stabilize costs.

In contrast, speculative risks—such as investing in the stock market—can lead to both gains and losses, making them ineligible for coverage. Pure risks involve the chance of loss or no loss, without the potential for gain, but not all pure risks are considered insurable (for example, certain natural disasters). Non-insurable risks normally pertain to risks that are high in severity or uncertainty; therefore, they lack sufficient data for effective risk assessment and pooling.

Thus, insurable risk is the type of