Causes damage to attackers when hit. The amount of damage is based solely on a character's total retaliation bonus from gear. However, certain spells that increase or decrease a character's overall damage also affect retaliation damage.
Items can be found that add a certain amount of stackable retaliation damage. These items usually have prefixes/suffixes like "of Thorns" or "Spiked". Also, the Siege set gives a small set bonus of +6 Retaliation damage.