Define a peril in risk terminology.

A peril in risk terminology refers specifically to the cause of a potential loss. It is the underlying event or situation that leads to a loss being realized, such as fire, theft, natural disasters, or accidents. Understanding perils is essential in risk management because identifying and analyzing these causes allows organizations to implement effective risk control measures and insurance protections to mitigate potential financial impacts.

The other options do not accurately capture the definition of a peril. For example, a measure of risk exposure relates to how much risk an organization may face but does not describe the cause of a loss. An unplanned financial outcome refers to unexpected financial results but lacks the explicit linkage to the events that trigger losses. A definition of risk management strategy encompasses broader planning and methodology to handle risks but does not narrow down to the specific causes of loss known as perils. Therefore, recognizing the definition of a peril is crucial in the context of assessing and managing risks effectively.