Think of a chain: a hazard makes a loss more likely, a peril actually causes it, risk is the chance that it happens, and the loss is the money or injury that results.

- Hazard: a condition that increases the chance of loss. Physical hazard: a physical condition, such as heart disease or color blindness. Moral hazard: dishonesty, such as setting a fire to collect insurance. Morale hazard: carelessness or indifference because "I'm insured anyway." - Peril: the direct cause of a loss: fire, earthquake, flood, tornado, theft, death, illness. - Risk: the chance or uncertainty of loss. Driving a car carries risk. - Loss: the final financial or bodily harm, the result you can measure in money.