A situation, behavior, or condition that may lead to adverse financial consequences is called...

• A. Peril
• B. Exposure
• C. Hazard
• D. Incident

Answer: (B)

Exposure refers to the potential for financial loss tied to assets, people, or activities that could be affected by a peril. The statement describes a situation, behavior, or condition that could lead to adverse financial consequences, which is exactly what exposure represents: what is at risk if a loss occurs. It’s not the peril—the actual cause of loss—nor the hazard, which is a condition that makes loss more likely or severe, nor the incident, which is the event that happens. So the described idea centers on exposure.