Which of the following is NOT a component of risk?

In the context of risk assessment, certainty is not considered a component of risk. Risk is fundamentally about uncertainty or the possibility of loss or harm. The components of risk, such as hazard, peril, and exposure, deal with different aspects of this uncertainty.

Hazard refers to a condition or situation that increases the likelihood of a loss occurring. It represents potential sources of danger or injury. Peril, on the other hand, is the actual cause of the loss—such as fire, theft, or natural disasters. Exposure quantifies the value, property, or life at risk; it reflects the extent to which an entity is susceptible to loss due to the identified hazards and perils.

Certainty, however, denotes a situation where outcomes are predictable and known, which is contrary to the concept of risk itself. In risk management and insurance, it's essential to identify and evaluate hazards, perils, and exposures to effectively understand and mitigate risks. Thus, recognizing that certainty does not fit into the framework of risk is foundational to grasping insurance principles.