What is an example of moral hazard in a clothing company?

A clothing company could exhibit moral hazard if, for example, it decides to use a lower quality fabric in making its products because the work is subcontracted or franchised under another firm's name, or it has taken out insurance coverage for sales problems that may arise. This is a deliberate move as the consequences of this action become the responsibility of some other party, specifically, reduced sales or a dented image and reputation of the other firm, or increased insurance claims against the insurer..