What is risk in insurance?

In insurance, risk refers to the likelihood of an event or incident occurring that could result in financial loss for the insured party. This could include events such as accidents, illnesses, natural disasters, or other unforeseen circumstances. Insurance companies assess and manage risk by calculating the probability of these events happening and determining the appropriate premiums to charge to cover potential losses. The goal of insurance is to mitigate the financial impact of such risks by providing compensation or coverage to the insured party in the event of a covered loss.