Question

If you are an employer, what kinds of moral hazard problems might you worry about with your employees?

Answer 1

Moral hazards are generally considered a situation in which one party engages in risky behaviour or it fails to act in good faith towards other party because it knows the other party bears the economic consequences of their behaviour.

There are various moral hazards employer would worry about with their employees. Like embezzlement of cash,

bad behaviour with colleagues,

performance of related party transactions,

poor performance regarding the targets, and many.

The moral hazards regarding employees where is with the employees position and the type of business.

For example: an employer found out that an employee was conducting teeming and lading for the embezzlement of cash. This is a kind of moral hazard problem that an employer is facing from the employee. It could take any actions against the employee and also make for the rules and restrictions for not happening of the same event again in the future.