What is the term for probability of loss or failure?

• A. Hazard
• B. Uncertainty
• C. Chance
• D. Risk

Answer: (D)

In risk management, the term that describes the probability of a loss or adverse outcome is risk itself. It conveys not only how likely something bad could happen but also, in practice, the potential impact of that outcome. A hazard is the source or situation that could cause harm, not the probability of the harm itself. Uncertainty refers to a lack of knowledge about what will happen, not to the specific likelihood of a loss. Chance is a general word for likelihood but doesn’t inherently include the idea of loss or its consequences. So, the best term for the probability of loss or failure is risk.