Which of the following best defines 'risk'?

The definition of 'risk' as the potential for loss from a hazardous event captures the essence of risk management in various fields, including finance, insurance, and other sectors. Risk is inherently associated with uncertainty and the possibility of adverse outcomes.

Defining risk in terms of potential acknowledges that it is not guaranteed that loss will occur; rather, it involves the likelihood of an unfavorable event happening. This understanding is crucial in risk assessment and management strategies, allowing organizations to identify, analyze, and mitigate risks proactively.

The other definitions provided relate to different aspects of risk. The certainty of financial loss frames risk as an absolute negative outcome, which does not account for the uncertainty that is fundamental to the concept of risk. An event that causes a loss describes the result of risk but does not encompass the broader idea of potential and likelihood. The action that can increase the likelihood of loss refers more to risk factors and does not define what risk itself is. Therefore, the selected definition effectively captures the comprehensive nature of risk as it is understood in professional contexts.