Speculative and pure risks. Great encyclopedia of oil and gas

The following risk functions can be noted:

1. incentive function of risk, which manifests itself in two aspects:

the constructive aspect, which consists in studying the sources of risk when designing operations and systems, designing special devices, operations, forms of transactions that eliminate or reduce the possible consequences of risk as a negative deviation;

the destructive aspect, which manifests itself in the fact that the implementation of decisions with unexplored or unreasonable risk can lead to the implementation of objects or operations that are considered adventurous, voluntaristic;

2. protective risk function It also has two aspects:

the historical and genetic aspect is that legal entities and individuals are forced to look for means and forms of protection against the unwanted realization of risk;

the social and legal aspect lies in the objective need to legislate the concept of “legitimacy of risk” and legal regulation of insurance activities;

3. compensating risk function can provide a compensating effect (positive compensation), i.e. additional profit compared to the planned one in case of a favorable outcome (realization of a chance);

4. socio-economic risk function, which consists in the fact that in the process of market activity, risk and competition make it possible to identify social groups of effective owners in social classes, and in the economy - sectors of activity in which risk is acceptable. State intervention in risk situations in markets (including guarantees, for example, in the financial and credit sector) limits the effectiveness of the socio-economic risk function. In social terms, this distorts the principles of equality for all market participants from different sectors of the economy, which can create an imbalance of risks in sectors of the economy.

Lecture 2. Risk classification

The effectiveness of a risk management organization is largely determined by the identification of its location in the general classification system.

Everyday risks can be classified according to the following criteria:

Depending on the possible result (risk event) risks can be divided into two large groups: pure and speculative.

Pure risks– the possibility of obtaining a negative or zero result. These include: natural, environmental, political, transport, property, production, and trade risks.

Speculative risks are expressed in the possibility of obtaining both positive and negative results. All are speculative financial risks, which are part of commercial risks ( rice. 1).

Financial risks, associated with the likelihood of loss of financial resources include (see Fig. 1):

1) risks associated with the purchasing power of money(inflationary, deflationary, currency and liquidity risks);

2) risks associated with investing capital,- investment risks(risk of lost profits, risk of decreased income, risk of direct financial losses).

Pure risk is risk that involves only the possibility of loss. Thus, an avalanche is a type of risk that no individual or legal entity can either predict or avoid. In other words, any disaster like the earth's

earthquake or fire, is costly for the people affected by it.

collapses, but its absence does not lead to increased profits.

Pure risk contains only the danger of damage, without any possibility of gain.

On the other hand, speculative risk opens up the prospect of making a profit, which is what pushes people to do business in the first place. Any business implies that by making money you can lose it. Speculative risk is a risk that involves the possibility of both profits and losses.

To understand the difference between pure and speculative risk, consider the example of Shua-Grip-International, a company that produces roller skates and rollerboards. When in the late 70s

years of teenagers suddenly became obsessed with roller skating, the twenty-four-year-old son of the company president

Nii decided to make a pair of skates himself, attaching them to the soles of old Adidas sneakers. The result was a completely new type of shoe - “joggers”, replacing the traditional boots with a raised toe. There was no guarantee that the public would prefer the new skates to the old ones, but the company was willing to take the risk. The decision to launch new shoes into mass production carried a significant amount of speculative risk, which ultimately paid off. Within 8 months the company became a leading skate manufacturer. At the same time, Shua-Grip was constantly threatened by various types of pure risk. Fires, floods or earthquakes could destroy the factory; all supplies could have been stolen from the warehouse; trucks delivering goods could have an accident; someone could have been injured due to defective skates. If this happened, the company would gain nothing. At best, she would try to prevent losses.

The uncertainty inherent in a market economy makes possible the existence and development of speculative risk. Particularly

but speculation is developed on the stock exchanges. There are 3 methods of speculative

activities on exchanges: 1.Purchase of goods, their storage for a certain period and subsequent sale. When buying a product, a speculator expects prices to rise. If prices do not rise, but

will go down, the speculator will suffer losses. 2. Conclusion of urgent (future)

black) contracts, when after a certain period the investor undertakes to buy or sell a certain

quantity of a commodity at a price determined today. But if

the price falls, he loses. 3. Conclusion of an option contract.

An option is a contract under which an investor buys the right to buy or sell in the future a quantity of a commodity at a price determined today. The specificity of this method is that the investor can exercise his right or not.

realize depending on your desire, which is determined

circumstances. If the selling price decreases contrary to expectations,

the investor will not exercise his right. In this case, however, he will lose the part that he paid in the form of a fee to the broker when concluding a contract with him. Option contract is more secure

(less risky) way of speculating compared to a forward contract, because the loss may only be equal to the broker's fee.

Both futures contracts and options are used in hedging - insurance of production and trade of industrial and trading firms using the exchange. Hedging helps reduce the risk of an unfavorable price change, but does not provide the opportunity to take advantage of a favorable price change. During hedging operations, the risk does not disappear, but it changes its bearer: production

the driver shifts the risk to the stock speculator, since he

exhibits risk aversion. The speculator takes on the risk because

is essentially a risk taker.

1.3 Insurable and uninsurable risks

Most pure risks (but not all of them) are insurable; speculative risks, generally speaking, are not insured.

An uninsurable risk is a risk that most insurance companies avoid insuring due to the fact that the probability is associated

The losses associated with it are almost unpredictable. You can buy insurance against natural disasters such as floods or earthquakes. But

insurance companies are always reluctant, to say the least, to consider

They open up the possibility of cooperation in cases where the risk is associated with government actions or the general economic situation. Uncertainties such as regulatory changes and economic fluctuations are beyond the scope of insurance.

Sometimes uninsurable risks become insurable when they accumulate

There is enough data to accurately estimate future losses. From-

Insurance companies were initially reluctant to insure airline passengers, but a decade later the risk became predictable.

Uninsurable risks include:

1.Market risks - factors that can lead to loss of property or income, such as: seasonal or cyclical price changes; consumer indifference; fashion changes; a competitor offering a higher quality product.

2. Political risks - the danger of such events as:

change of government; war; restrictions on free trade; unsupported

new or excessive taxes; restrictions on free currency exchange.

3.Production risks - the danger of such factors as: uneconomical

technical operation of equipment; lack of raw materials; the need to solve technical problems; strikes, absenteeism, labor conflicts.

4. Personal risks - the danger of factors such as: unemployment; poverty

due to divorce, lack of education, lack of opportunity

get a job or lose health in military service.

An insured risk is a risk for which the level of acceptable losses is easily determined, and therefore the insurance company is ready to compensate for them.

Insured risks include:

1. Property risks - the risk of losses from a disaster, which lead to: direct loss of property; indirect loss of property.

2. Personal risks - the risk of losses as a result of:

premature death; disability; old age.

3. Risks associated with legal liability - the risk of losses due to: using a car; stay

in a buiding; occupation; production of goods; professional mistakes.

The insured risk that the insurance company is willing to take on,

usually meets the following requirements:

1.The insured danger cannot be the result of intentional

actions. This means that insurance companies do not pay for damage intentionally caused by the insured company itself or by an individual.

by a person, at her direction or with her knowledge. For example, in the insurance

43. Pure and speculative risks

Depending on the event, risks can be divided into two large groups: pure and speculative.

Pure risks mean obtaining a negative or zero result.

Speculative risks mean obtaining both positive and negative results.

The group of pure risks usually includes the following types:

1) natural risks that are associated with manifestations of natural forces: earthquakes, floods, storms, fires, epidemics, etc.;

2) environmental risks, which act as the possibility of losses associated with the deterioration of the environmental situation;

3) socio-political risks that are associated with the political situation in the country and the activities of the state. This type of risk includes political upheavals, unpredictability of the state’s economic policy, changes in legislation, etc.;

4) transport risks – risks associated with the transportation of goods by transport: road, sea, rail, etc.;

5) commercial risks (actually entrepreneurial) represent the danger of losses in the process of financial and economic activity. They mean the uncertainty of the results of a given commercial transaction.

Based on their structural characteristics, commercial risks are divided as follows:

1) property risks that are associated with the likelihood of loss of the entrepreneur’s property due to theft, negligence, overvoltage of technical and technological systems, etc.;

2) production risks that are associated with losses from production interruption due to the influence of various factors, and primarily with the loss or damage of fixed and working capital (equipment, raw materials, transport, etc.), as well as risks associated with the introduction into production new equipment and technology;

3) trade risks that are associated with losses due to delayed payments, refusal to pay during the transportation of goods, non-delivery of goods, etc.

The group of speculative risks usually includes all types of financial risks that are part of commercial risks. Financial risks are associated with the likelihood of loss of financial resources (cash) and are divided into two types:

1) risks associated with the purchasing power of money;

2) risks associated with investing capital (investment risks themselves).

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In the course of his activities, an entrepreneur may face various types of risks: production, financial, market, etc. For ease of analysis, risks are usually classified.

Thus, depending on the occurrence factor, risks are divided into three large groups:

natural and climatic;
economic.

Natural and climatic risks associated with the manifestation of natural forces, such as earthquakes, floods, storms, epidemics, etc.

Political risks associated with the political situation in the country and the activities of the state. These include:

the impossibility of carrying out economic activities due to military actions, revolution, aggravation of the internal political situation in the country;
nationalization of enterprises;
confiscation of goods or businesses;
introduction of an embargo, i.e. prohibition by the state of the import or export of any goods or currency, refusal of the new government to fulfill the obligations assumed by its predecessors;
introduction of a moratorium (deferment of fulfillment of obligations) on external payments for a certain period due to the occurrence of any emergency events;
changes in state tax policy, etc. Natural, climatic and political risks, as a rule, simultaneously affect the activities of a large number of enterprises.

Economic risks associated with the activities of a separate enterprise. These include:

risk of accidental loss of property;
risk of non-fulfillment of contractual obligations;
economic risk;
price risk;
marketing risk;
inflation risk;
investment risk;
risk of insolvency;
transport risk.

Risk of accidental loss of property associated with the possible loss of enterprise property (buildings, structures, equipment, inventories of goods, etc.) as a result of an accident, fire, theft, non-compliance with storage conditions, sabotage. As a rule, the listed reasons lead to significant losses, which indicates the high importance of this type of risk in the general list of possible economic risks.

Risk of non-fulfillment of contractual obligations caused by dishonesty of commercial partners, their failure to comply with their obligations, or their insolvency. In modern conditions, almost every commercial enterprise faces this type of risk.

Economic risk arises as a result of a disruption in the process of economic activity of an enterprise and failure to achieve planned economic indicators (for example, the volume of sales of goods or profit). It may be associated with changes in the market situation, as well as with economic miscalculations of the managers of the enterprise itself. This type of risk is the most common in the activities of an enterprise.

Price risk - one of the most dangerous types of risk, since it is directly and to a large extent associated with the danger of loss of income and profit of a commercial enterprise. It manifests itself in an increase in the level of selling prices of goods manufacturers, wholesale prices of intermediary organizations, an increase in prices and tariffs for services of other organizations (for example, energy, transport tariffs, rent, etc.), an increase in the cost of equipment. Price risk constantly accompanies the economic activities of an enterprise.

Marketing risk represents the danger of choosing the wrong strategy for behavior in the market. This could be an incorrect focus on the consumer of goods, errors in choosing the assortment, incorrect assessment of competitors, etc.

Currency risk inherent in commercial operations in the field of foreign economic activity. It represents the danger of foreign exchange losses associated with changes in the exchange rate of one currency against another. By importing goods, the enterprise loses when the exchange rate of the corresponding foreign currency increases relative to the national one. On the contrary, a decrease in this exchange rate leads to losses in the export of goods.

Interest rate risk consists of an unexpected change in the interest rate on bank deposits and interest paid by the enterprise for the loan provided.

Inflation risk - This is the danger that cash income received when inflation rises will depreciate faster than grow. At the same time, the real value of the enterprise’s capital will also depreciate.

Investment risk represents the danger of unexpected financial losses in the process of the investment activity of an enterprise (i.e., investing capital in the creation of other enterprises, expansion or capitalization of one’s own enterprise, or in the purchase of securities).

There are two types of investment risk: the risk of real investment and the risk of financial investment. The first may arise as a result of a violation of the schedule and poor quality of work, non-compliance with project documentation, or exceeding the planned budget. The second type of investment risk is caused by a decrease in the market value of shares, bankruptcy or insolvency of organizations whose shares or other securities are held by the merchant. These risks are associated with the danger of losing part of your capital, so they are also included in the group of the most dangerous risks.

Insolvency risk is expressed in the fact that the enterprise will find itself in such a situation that it will not be able to pay its obligations. The reason for its occurrence may be improper planning of the timing and amount of receipt and expenditure of funds. The financial consequences of such a risk can be the initiation of bankruptcy proceedings, so it is also considered one of the most dangerous.

Transport risk - This is the risk of loss or damage to goods during transportation.

In addition to those listed, there are other types of economic risks, but their consequences are not so dangerous for the activities of the enterprise. These include: the risk of loss of goods in stores associated with theft from customers; the risk of loss of goods as a result of violation of storage terms and conditions; financial losses due to untimely execution of settlement transactions due to an unsuccessful choice of a commercial bank; risk of falsification of financial documents by employees, etc.

Based on other classification grounds, risks are divided into:

by duration of exposure:

temporary;
permanent;

by nature of occurrence:

related to economic activities;
related to the personality of the entrepreneur;
associated with a lack of information about the external environment;

by area of origin:

internal;
external;

if possible, insurance:

insured;
uninsured.

by scale:

local;
global;

according to expected results:

statistical (simple);
dynamic (speculative);

according to the degree of admissibility:

acceptable;
critical;
catastrophic;

according to the degree of validity:

legitimate;
illegal.

Depending on the possible result, all risks can be divided into two large groups: pure and speculative.

Pure risks - These are the risks of obtaining only a negative or zero result. These include natural-climatic, political and some economic risks.

Speculative risks - These are the risks of obtaining both negative and positive results. These risks include most business risks. Thus, inflation risk can lead not only to losses, but also to an increase in real income (for example, if the price at which an enterprise purchases goods grows slower than the rate of inflation).

Depending on the sources of occurrence, all economic risks can also be divided into two groups:

dependent on the economic activity of the enterprise;
independent from the economic activities of the enterprise.

Risks independent of the enterprise’s activities, are called systematic, or market. They are associated with factors whose effects cannot be changed or limited (natural and climatic conditions, social relations, social conditions, legislation, etc.). All market participants are exposed to these risks. They may be caused by changes in individual stages of the country’s economic development, the adoption of political decisions on certain economic issues, changes in market conditions, etc. The risks of this group include currency, interest rate, inflation and (partially) investment risks.

Risks depending on the activities of the enterprise, usually called non-systematic (specific). They depend on the management decisions made, on the practical experience and qualifications of the enterprise's managers, their commitment to risky business operations that have a high rate of profit, but also a high probability of losses. The negative consequences of such risks can be prevented through effective management.

Depending on the stage of solving the problem, risks are distinguished:

in the field of decision making;
in the field of solution implementation.

Pure risk - English Pure Risk, is a term used to describe any situation in which there is no potential for gain, regardless of the scenario. As a rule, events that involve this type of risk are beyond the control of the person taking the pure risk, which effectively deprives him of the ability to make a conscious decision. One of the tools for minimizing losses from pure risks is insurance, which is often used as a means of compensation for damage when, in a certain situation, profit can no longer actually be obtained.

Since there is no likelihood of profit from taking pure risk, it is considered the opposite of speculative risk. Taking the latter does require a conscious decision based on a detailed examination of all risk factors before choosing a course of action. Typically, speculative risk has some potential for generating some kind of income or profit over a specified period of time. One example of speculative risk is the purchase of securities where there is some reasonable expectation that the stock price will rise if certain events take place on the trading floor. Speculative risk also carries the possibility of loss, but this potential is offset by the possibility of income.

In the case of pure risk taking, there is no likelihood that a return will be realized as a result. For example, if a house is destroyed by a natural disaster, its owner will suffer losses that cannot be recovered, even if the land on which the house was built is eventually sold. While a homeowner may be able to minimize their losses by selling their property, the proceeds from the sale will not fully replace the lost home. To purchase a similar new home, a person needs to buy it, for which, in turn, he needs to cover the difference between the proceeds from the sale of the previous property and the cost of the new property. As a result, the damage cannot be fully compensated under any developments.

There are other forms of pure risk that result in a kind of loss that cannot be fully compensated. The premature death of one spouse will result in a loss of household income that can never be fully compensated. “Identity theft” results in losses that are so comprehensive that even if the problem is successfully resolved, the cumulative losses will never be fully recovered. Even a situation such as permanent disability, which makes it impossible to continue working in a given workplace, cannot be fully compensated by employment in another place with easier working conditions.

In many situations, insurance coverage can help minimize the amount of loss associated with pure risk by transferring some of it to the insurance company. Property insurance can help offset some of the loss resulting from a natural disaster, providing the insured party with the resources needed to rebuild the property. Disability insurance can provide at least some income that can be used to partially replace income from work that the insured can no longer perform. The benefits of a life insurance policy help the surviving spouse replace some of the income that the deceased partner received. Therefore, insuring pure risk that remains outside the control of the insured party is extremely important.