Nina's home is located in a high crime neighborhood. One day, she comes home from work to find that her garage door has been vandalized and must be replaced. Nina's insurer pays her a $2,200 settlement for her claim. The insurer considers the settlement:

Risk refers to the uncertainty regarding a loss occurring, which can stem from various factors such as environmental hazards or personal behavior. In this scenario, while Nina's home is in a high crime neighborhood, the insurer's payment is not a risk itself but a response to an actual loss that has already occurred.

A hazard is a condition or situation that increases the likelihood of a loss taking place. While living in a high crime neighborhood may pose a hazard, the settlement paid by the insurer is not considered a hazard, but rather a financial remedy to the loss that has already been incurred.

Exposure refers to the potential for a loss to occur, often tied to the value of property or the risk of an event happening. Although Nina's home is exposed to risks due to its location, the insurer's payment represents a response to a confirmed loss, rather than the concept of exposure itself.