Which type of risk is characterized by investing in a potentially lucrative venture?

Speculative risk is characterized by the potential for both gain and loss when investing in a venture. Unlike pure risk, which involves situations that can only lead to loss without the chance for gain (such as natural disasters or theft), speculative risk encompasses activities that have uncertain outcomes resulting in possible profits or losses.

Investing in a potentially lucrative venture inherently involves uncertainty; one might earn considerable returns if the venture succeeds, but there is also the risk of losing the initial investment if it fails. This dual nature of possibility for gain and loss makes speculative risk a defining feature of investment scenarios where individuals or businesses seek to capitalize on new opportunities. This aligns well with the nature of many entrepreneurial endeavors, where the potential for financial reward is weighed against the risks involved.