Speaks of the consequence of a loss event when it does occur.

• A. Severity
• B. Probability
• C. Risk
• D. Exposure

Answer: (A)

The main concept is the impact of a loss event—the severity of the consequence if it occurs. Severity describes how bad the outcome would be: the magnitude of the loss, such as injuries, downtime, or financial cost. Probability is about how likely the event is to happen, not how severe the outcome would be. Risk combines both factors, representing the overall chance of loss times its potential severity. Exposure refers to the assets that could be harmed or at risk, not the level of consequence. So the statement correctly points to severity as the measure of the loss’s impact when it occurs.