MANAGEMENT

Detailed explanation-1: -Hazard: Condition that increases the probability of loss.

Detailed explanation-2: -A physical hazard is a physical condition that increases the possibility of a loss. Thus, smoking is a physical hazard that increases the likelihood of a house fire and illness.

Detailed explanation-3: -Risk is the chance or probability of a loss, and peril is a direct cause of loss. If, as in my case, which I share starting on page 48 of this issue, there is a flood from a broken pipe, then the peril is water. A hazard is anything that causes or increases the likelihood of a loss.

Detailed explanation-4: -A peril is a potential event or factor that can cause a loss, such as the possibility of a fire that could engulf a house. A hazard is a factor or activity that may cause or exacerbate a loss, such as a can of gasoline left outside the house door or a failure to regularly have the brakes of a car checked.

Detailed explanation-5: -It is the active ingredient that could create a peril, which could then lead to a particular loss event. To determine the exposure to risk is to ask, “How vulnerable is the insured item to loss?” Study the three types of hazards: (1) Physical, (2) moral, and (3) morale.