What term describes the likelihood of a loss occurring?

The term that describes the likelihood of a loss occurring is "risk." In insurance and finance, risk refers to the chance or possibility that a financial loss or a negative event will happen. Understanding risk is crucial in the context of title insurance, where insurers assess the potential for losses stemming from defects in title, ownership disputes, or other issues that could arise after a real estate transaction.

Hazard, on the other hand, refers to a condition or situation that increases the probability of a loss occurring. While hazards contribute to risk, they are not synonymous with it. Peril denotes the specific cause of loss, such as fire, theft, or natural disasters. Exposure relates to the extent to which a property is subject to potential loss. Each of these terms plays a role in the overall understanding of risk, but risk specifically encapsulates the likelihood of loss itself, making it the correct answer in this context.