Which type of risk is defined as a potential financial loss due to property damage?

The term that defines a potential financial loss due to property damage is commonly associated with physical hazard. This type of risk pertains to tangible dangers that can affect the physical integrity of property and lead to financial repercussions. Physical hazards include elements such as the condition of the property, susceptibility to natural disasters, or inherent weaknesses in the structure. When such hazards lead to damage, they pose a significant risk that could ultimately result in financial losses for property owners or insurers.

On the other hand, asset risk typically refers to the risk related to the value of an asset, which is broader than just property damage. Environmental hazard pertains to risks related to environmental conditions, such as pollution or natural disasters, affecting property, but it does not specifically highlight the potential financial loss due to property damage itself. Financial exposure relates to the overall risk of loss in financial terms but does not specifically define the type of risk concerning property damage. Thus, identifying physical hazard as the correct answer aligns directly with the nature of risks associated with potential financial losses due to property damage.