What is referred to as the cause of a loss in risk management?

The term "peril" specifically refers to the cause of a loss in risk management. Perils are the actual events or situations that can lead to financial loss or damage. For example, risks such as fire, theft, or natural disasters like earthquakes or floods are all categorized as perils. In the context of insurance and risk management, identifying and understanding perils is crucial because it allows organizations and individuals to implement appropriate strategies for managing those risks.

Other concepts associated with risk management, such as hazards and exposures, play different roles. Hazards refer to conditions that increase the likelihood of a peril occurring, while exposure denotes the degree to which a person or entity is vulnerable to potential loss. These are important components of the risk management process, but they do not directly define the cause of the loss in the same way that perils do.