I vote neither. My vote is for the entire Wizarding World (Well, fine just Britain really as thats the only one we know) to be the much more frightening aspect of the books. Consider these:
1a) The rampant corruption/poor management within the Ministry of Magic. First off we have the fact that the MoM apparently has so much control of the news (specifically the Daily Prophet) that they can print border line slander of people the Prime Minister finds uncomfortable as we see in book 5. Then we have the fact that the MoM can extort ridiculous amounts of control over the only known Wizarding school in Britain, putting in place their own inquisitors and being able to dictate the curriculum. Even before book 5, we learn in Chamber of Secrets that Lucius Malfoy was basically able to blackmail the governors into firing Dumbledore.
1b) One of the sympathetic characters (Arthur Weasley) is stated that he would have to arrest himself if he ever raided his own house because he frequently flaunts the rules of his own department.
2) The fantastic amount of racism inherent in the system. Werewolves, despite having a known medical aid in the Wolfsbane potion are treated as predators for having a disease, then there's the prejudice displayed against Giants, Centaurs and possibly the goblins as well. The WW keeps an entire race (house elves) as slaves to be beaten and this is treated as perfectly acceptable, to the extent that Dobby is considered a complete maverick in the fact that he asks for some wages and some small time off for a holiday (Seriously, I never got why we're supposed to think Hermione is some fanatic for wanting to change this). Then of course there's the, admittedly less popular, blood supremacy among certain wizards, and while most wizards don't seem to have a problem with muggle-borns there does seem to be some bad blood towards Squibs.
3) Pretty much every seen instance of wizarding law seems to have some huge flaw. Trials seem to be decided by the whims of whoever in court with Fudge again being shown to try his very best to screw over Harry's trial in book 5 and it doesn't seem much better from what we saw of the Death Eater trials in book 4. The known wizarding prison is guarded solely by literally joy-sucking vampires who only care as long as they are fed. Even the aurors only come off as mildly better, and even then they come off as being inept at investigations (the fact people just seem to accept Voldemort, one of the most powerful wizards known, was killed attacking a baby or their attempts to deal with Sirius) or at police work (seriously, how did they manage to not catch any Death eaters at the Quidditch world cup?). Outside of people like Kinglsey or Mad-Eye the jurors don't come off well (I'm reminded of McGonagall being hit with five stunners when they attack Hagrid in the books).
4) How about the fact that the MoM seems to be completely unable to regulate animagi? We know of at least 4 and 3 of those managed it as teens.
5) Then there's wizarding "pranks" like Love Potions that seem to be basically magical date-rape drugs that (if I'm correct), actually help contribute to Voldemort being as messed up as he is (I'm sure JKR's said outside of the books that the reason Voldemort can't feel love is because of them)
6) There's also the fact that the Minister of Magic nor anyone else sees fit to give any muggle and decent knowledge of the Wizarding World or their troubles, even as Voldemort is murdering people near the Prime Minister. When we add that to all the other stuff I've mentioned how much of a nightmare must it be to protect muggle from wayward wizards?
