Which of the following is a component of determining risk?

Determining risk fundamentally involves understanding the potential for loss and its impact, which is encapsulated in the analysis of loss event frequency and loss magnitude. This method specifically targets two critical aspects of risk assessment: how often adverse events occur (frequency) and the potential severity of the consequences when they do occur (magnitude). Together, these elements provide a quantitative basis for evaluating risk, making it essential for informed decision-making.

While assessment of employee behavior, evaluation of market trends, and reports from external consultants can provide useful insights or context in a broader risk management framework, they do not directly quantify the risk in the same systematic manner as loss event frequency and magnitude analysis. This makes option B the most relevant and direct component of determining risk. It allows organizations to better understand their vulnerabilities and to prioritize risk management efforts effectively.