Which of the following best defines 'insurable risk'?

The definition of 'insurable risk' is best captured as a risk that meets the criteria for coverage by an insurance policy. When assessing whether a risk is insurable, several key factors are considered. These include the likelihood of the risk occurring, the potential for loss, the ability to measure the loss in financial terms, and the risk must not be catastrophic to the insurer.

For a risk to be insurable, it must also be random in nature and significantly affect a large number of people or organizations rather than a single individual incident. Insurance exists to pool risk among many participants, thereby allowing for losses that occur to be spread across a larger group. The essential function of insurance is to provide a safety net for these risks that meet all the criteria specified.

Other options do not fully encapsulate the concept of insurable risk. For example, the notion of a risk being avoidable through strategic planning does not align with the essence of insurable risks, which inherently involve uncertainty and cannot always be eliminated. Similarly, while quantifying and assessing risks is important, the ability to do so does not alone make a risk insurable; it also must meet other criteria defined by insurance policies. Thus, while management frameworks and proven occurrences can relate to the handling