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It's a specific modifier that kicks in once 22% or less of the original force exists and the enemy has a 2.6x advantage on your forces. It immediately applies a -120 morale malus to every unit, which then immediately breaks and runs.
Also ... as the effect of "army losses" begins to occur on a certain side you mean the begin to move towards the eventual end result of routing and not "army "losses" begin to kick in and they immediately break right?
Cause "army losses" occur but units are still fighting it is just one of the negative values applied to overall moral which increases in value as more and more losses occur correct?
Please forgive me if I am incorrect in this. Thank you for future clarification.