Which of the following statements about risk is true?

The statement that risk is the uncertainty of loss or damage is accurate as it captures the fundamental essence of what risk entails. In the realm of insurance, risk refers to the potential for a loss or damage that could occur to a person or property, and it embodies the unpredictability surrounding such events. This understanding is critical because it frames how insurance works; policies are designed to mitigate the financial impact of these uncertainties.

Looking at the other options, the first one claims that risk can be completely eliminated, which is not realistic since risk is an inherent part of everyday activities and cannot be entirely erased. The second option suggests that all risks can be covered by insurance, which is also misleading since there are certain risks or situations that may not be insurable or may be considered too high to cover. Lastly, the idea that higher risk always leads to lower premiums contradicts the principles of risk assessment in insurance. Typically, higher risks usually result in higher premiums, as insurers must account for the likelihood of a loss when calculating costs. Hence, the correct choice regarding the nature of risk is that it represents the uncertainty of loss or damage.