What best describes the meaning of pure risk in financial terms?

Pure risk, in financial terms, is best described as a situation where there is a chance of financial loss, but no potential for financial gain. This type of risk occurs exclusively when the outcome can only result in a loss or no change, without any possibility of profit. For example, risks associated with natural disasters, theft, or accidents fall under pure risk because they can lead to financial loss but do not offer an opportunity for financial gain.

In contrast, other concepts of risk involve scenarios where there is a possibility for both potential gain and loss, which does not apply to pure risk. Therefore, the distinguishing factor of pure risk is the absence of any upside, making it important for individuals and businesses to assess and manage such risks to mitigate possible financial repercussions.