Which type of risk is primarily seen as a result of intentional damage?

The correct answer is C, moral hazard. This type of risk arises when an individual or entity engages in behavior that increases the likelihood of a loss because they do not bear the full consequences of that risk. Specifically, moral hazard typically involves situations where a person may take greater risks because they know that they will not be held fully accountable for the negative outcomes.

Intentional damage perfectly aligns with the definition of moral hazard, as it involves a conscious choice to engage in risky or harmful behavior, often with the expectation that any resulting losses will be mitigated by insurance coverage or other means. In insurance contexts, moral hazard underscores the potential issues that arise when policyholders act in ways that may amplify risks without facing the direct repercussions of their actions.

Other types of risks mentioned do not represent intentional damage. For example, emotional hazard relates more to mental or psychological risks, physical hazard pertains to physical conditions that increase the chance of loss, and legal hazard involves risks stemming from legal actions or changes in legislation rather than deliberate actions taken by individuals.