What is meant by the term "moral hazard"?

 

If we talk in very simple terms then model Hazard is the type of risk that a party has not entered into a contract in good faith or has provided misleading information about its assets, liabilities or credit capacity

in additional we can also say that moral Hazard also may mean a party has an incentive to take unusual risk in a desperate attempt to earn the profit before the contract settles

each party in the contract can have the opportunity to gain from acting contrary to the principles laid out by the agreement

for example we can say that a company is insured it may take on higher risk knowing that its insurance will pay the associated cost