What does the term 'indirect loss' mean?

The term 'indirect loss' refers to the financial impact that arises as a consequence of a direct loss. This means that when a specific event causes direct damage or loss—such as the destruction of property—there are often additional financial repercussions that follow. For example, if a business suffers damage to its building, not only does it incur the immediate costs of repairs or replacement, but it may also experience a loss of income due to business interruption during the repair period. Consequently, the indirect loss is the resulting financial detriment linked to the initial event, highlighting how interconnected these financial effects can be in risk management scenarios.

In this context, other options do not accurately depict the concept of indirect loss. A direct loss of funds would be considered a straightforward loss where funds are immediately diminished, not the broader impact of a preceding event. A loss completely unrelated to any event does not qualify as either a direct or indirect loss since it lacks the necessary connection to a specific triggering incident. An outcome that ensures profit does not align with the notion of loss at all, as it suggests a positive financial gain rather than a negative impact.