What is an example of pure risk in daily life?

Pure risk refers to situations that present a chance of loss or no loss, but no potential for financial gain. In daily life, a car accident exemplifies pure risk because it entirely entails the possibility of incurring damage or injury without any prospect of profit from the situation. The outcome can only be unfavorable—losses from repairs, medical bills, or liability—making it a clear representation of pure risk.

In contrast, investing in real estate, gambling, and purchasing stocks all involve speculative risks, where there is a chance for both gain and loss. These activities are associated with financial ventures that carry the potential for profit, thus differentiating them from the concept of pure risk.