Which type of risk arises from personal actions towards others?

Liability risk refers to the exposure to legal actions or claims arising from the actions or omissions of an individual that can cause harm or damage to others. This type of risk is inherent in situations where an individual or organization can be held responsible for injuries or property damage that they cause to another party.

In personal insurance, liability risk is crucial because it provides coverage against the financial consequences of lawsuits or settlements that result from such actions. For instance, if a person accidentally damages someone else's property or causes bodily injury, liability insurance can help cover the legal costs and any awarded damages.

Operational risk, on the other hand, deals with the risks associated with a company's internal processes, systems, and people, not personal actions towards others. Market risk relates to the dangers of losses in investments due to market fluctuations, while credit risk concerns the possibility that a borrower may default on a loan or fail to meet contractual obligations. These risks do not directly involve personal actions toward others in the same context that liability risk does.