What defines a "risk" in insurance terminology?

The term "risk" in insurance terminology refers specifically to the possibility of a loss occurring. In the context of insurance, risk is what drives the need for coverage; it represents uncertainty about an event that could result in financial loss. Insurers evaluate this risk when underwriting policies to determine how likely it is that a claim will be made and how much it will cost to provide coverage.

In contrast, the other options do not accurately define risk. Assurance against potential loss refers to the purpose of insurance rather than the concept of risk itself. A method of calculating premiums involves assessing various factors related to risk but does not define what risk is. Similarly, a requirement for issuing a policy pertains to the criteria that must be met for a policy to be written, rather than elucidating the nature of risk itself. Thus, the correct understanding of "risk" is centered on the possibility of loss, which underpins the entire insurance framework.