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I have a password on my private key. When I login via Putty I need to input my password. Curious if this password is used locally or requested of by the server? Could this be a security risk because the password isn't encrypted?

Authenticating with public key "private-rsa"
Passphrase for key "privatekey-rsa":
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Its used locally and is never transmitted to the server. You can verify this by removing (or maybe changing) the passphrase - and you will see nothing on the server changes.

The passphrase simply encrypts the private key. The private key is never transmitted to the server - indeed ideally it should never be transmitted. (only public keys which are derived from it)

Its not a security risk. The passphrase is used as a second factor to ensure your private key remains private, even if someone manages to get a copy.

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