Final answer:
Financial Risk is the category for risks related to property, liability, or personnel loss exposures that can be insured against. Insurance is a financial tool for managing these risks, but it can lead to moral hazard, where insured parties take greater risks than they otherwise would.
Step-by-step explanation:
The risk arising from property, liability, or personnel loss exposures and is generally the subject of insurance falls into the category of Financial Risk.
This type of risk involves the possibility of losing money or facing a financial hit due to various unpredictable factors that an individual or business has limited control over, such as natural disasters, accidents, or theft. It is one of the economic risks that can be mitigated through purchasing insurance policies.
With insurance, policyholders make regular payments to an insurance entity, which then compensates a member who incurs significant financial damage from an event that the policy covers.
Moral Hazard is an associated issue where people might engage in riskier behavior because they have insurance coverage, thus being less concerned with the prevention of the insured event.
The risk described in the question is an example of Operational Risk. Operational risks are risks that arise from a company's daily operations, including property, liability, and personnel loss exposures. These risks are typically covered by insurance to protect against potential financial losses.