What is a physical hazard in risk management?

A physical hazard in risk management refers to a condition or circumstance that increases the likelihood of a loss occurring. This can include factors such as structural issues in a building, unsafe working conditions, or the presence of hazardous materials. By identifying and addressing these hazards, organizations can manage risk more effectively and reduce the probability of accidents or losses.

The other options do not align with the definition of a physical hazard. Individual character defects pertain to moral hazards and how a person may act under certain conditions. Legal issues involve regulatory and compliance factors that can impact insurance claims but are not categorized as physical hazards. Lastly, an economic downturn affects financial stability and market investments, which does not relate directly to the physical conditions that lead to risk in property and safety contexts.