In other words, you can't buy insurance to cover gambling losses or losses from risky business ventures. Risk, peril, and hazard are important insurance terms that have distinct meanings in the insurance industry. Risk , as you read earlier, is the chance or uncertainty of financial loss. Peril is the cause of a possible loss, the contingency for which you take out insurance. Examples of perils are fire, windstorms, explosions, robbery, accidents, and premature death.
Hazards increase the risk of loss through some peril.
For example, defective house wiring is a hazard that increases the likelihood of the peril of fire. Risk management is a strategy for protecting and conserving assets and people. It helps reduce financial losses caused by destructive events. Most people think of risk management as buying insurance, but insurance is not the only method of dealing with risk. In certain situations, other methods may be less costly.