What best defines risk in insurance?

• A. The insured's wealth
• B. The insurance policy term
• C. The probability of a loss or injury that creates or suggests a hazard
• D. The guaranteed loss

Answer: (C)

In insurance, risk means the chance that a loss or injury will occur, especially when there are factors—hazards—that could make that loss more likely. The best definition captures both the probability of a claim and the presence of conditions that could cause harm, which is exactly what insurers assess when underwriting and pricing policies. The other ideas don’t fit: wealth isn’t risk itself, the policy term is just how long coverage lasts, and a guaranteed loss is an actual event that has already occurred, not the potential for one.