What is the term for the possibility that a loss will occur?

The term for the possibility that a loss will occur is called risk. Risk encompasses the chance of a loss happening, which can arise from various circumstances or events. When assessing risk in the context of insurance, it refers to the uncertainty regarding financial loss. Understanding risk is crucial for insurers as it helps them determine policy terms, premiums, and the likelihood of claims being made.

Hazard, on the other hand, refers to specific conditions or situations that increase the likelihood of a loss occurring, while liability relates to the legal responsibility for causing damage or loss to another person. Exposure refers to the measure of risk or potential loss associated with a specific asset, situation, or activity. Thus, the correct term that directly addresses the chance of experiencing a loss is risk.