C. INSURANCE

An insurable risk is a type of danger or loss that an insurance company is willing to cover through an insurance policy. For a risk to be insurable, it must be pure risk, meaning there's only a possibility of loss with no chance of gain. Think of it this way: if you insure your house against fire, fire is a pure risk because you either lose money or lose nothing—you cannot gain from it.

Fundamental risks are large-scale dangers affecting many people at once, like earthquakes or floods. For example, if a severe flood damages thousands of homes in Lagos, insurance companies may struggle to pay all claims at once. However, particular risks affect individuals only, like your car being stolen, which insurers happily cover because claims are scattered and manageable.

For insurance to work properly, the risk must be clearly defined, financially measurable, and not deliberately caused by the policyholder.