Which type of risk cannot be insured due to its nature?

The correct answer is speculative risk because of its inherent characteristics. Speculative risk is associated with situations that involve a chance of gain or loss, making it fundamentally different from pure risk, which involves only the possibility of loss or no loss. Since speculative risks entail uncertainty that can lead to profit as well as loss—for example, investing in stocks or real estate—insurers typically do not cover them.

Insurance is designed to protect against pure risks, where the outcomes are limited to potential losses, such as those resulting from accidents, theft, or natural disasters. In contrast, speculative risks can involve voluntary decisions with uncertain outcomes, which means insuring them would not be financially viable for insurance companies.

The other types of risks mentioned in the question—pure risk, business risk, and liability risk—are generally insurable. Pure risks can be covered effectively because they involve potential losses without any possibility of gain, allowing insurers to assess and manage those risks. Liability and business risks can also be insured, as they typically fall under scenarios where loss potential is defined and manageable.