Related to risk are peril and hazard. A peril is the cause of an economic loss. An economic loss is the event for which insurance is purchased. Insurance provides protection against an economic loss. Examples of perils include collision, fire, hurricane, and theft. A hazard is a condition that may create or increase the chance of an economic loss arising from a given peril.
Moral Hazard. A moral hazard is the potential for economic loss as the result of individual tendencies on the part of the insured. A moral hazard involves some type of prior knowledge or premeditation. These tendencies could lead to a peril and create an economic loss. For example: Smoking cigarettes can lead to emphysema. Moral hazards are behaviors with little or no regard to consequences.
Morale Hazard. A morale hazard is an individual tendency that arises from attitude or state of mind. Often, it is a temporary lapse in judgment or careless attitude. An example of morale hazard is road rage.
Physical Hazard. A physical hazard is a characteristic pertaining to an individual or property that increases the chance of an economic loss. An example of a physical hazard is building a house in a flood zone.