A 100-year flood is an example of which of the following types of risk?

A 100-year flood is classified as a static risk because it refers to a predictable and measurable event that does not change over time. Static risks are typically associated with events that are unlikely to occur frequently but can have significant consequences when they do happen. In the case of a 100-year flood, this terminology indicates that there is a 1% chance of such a flood occurring in any given year, making it a risk that can be assessed and managed through appropriate insurance and preparedness measures.

This understanding contrasts with dynamic risks, which are influenced by changing conditions, such as market fluctuations or evolving regulations. Speculative risks involve the possibility of gain or loss and are often tied to ventures such as investments in business, which are inherently uncertain. Investment risk is a subset of speculative risk specifically related to financial investments and their potential for fluctuating returns. The classification of the 100-year flood as a static risk highlights its predictability in risk management strategies, which are critical in both planning and insurance underwriting.