Which hazard might be impacted by an individual’s risky behavior?

The correct choice is morale hazard. Morale hazards arise when an individual's behavior or attitude affects their judgment regarding risk. For instance, if someone engages in reckless activities, such as driving unsafely or ignoring safety protocols because they believe they are covered by insurance, this reflects a lack of concern for potential losses. Their risky behavior can lead to an increase in likelihood or severity of a claim, since they may not take necessary precautions to avoid losses.

In contrast, other types of hazards have different implications. A legal hazard pertains to conditions or situations that could result in legal liability, which may or may not relate to an individual's behavior. Moral hazard involves a situation where an individual might engage in risky behavior due to the lack of financial consequence, usually in relation to asymmetric information, such as having insurance. Physical hazards are tangible risks related to the condition of the property or environment but are not influenced directly by individual behavior. Thus, morale hazard is uniquely connected to the impact of an individual's attitude and actions on risk exposure.