The Medal of Horror represented an award given to Imperial starfighter pilots who managed to complete ten tours of duty. It's possible the name came from the extreme level of destruction a soldier was expected to witness by this stage in their career. It's also possible the name was a reference to the terrible things an Imperial was expected to have either experienced or perpetrated after accumulating so much experience.
The medal was bestowed following the successful defeat of the Nami pirates and the destruction of their TIE/D Defender manufacturing facility. The medal was meant to symbolize the fear and dread caused by the initial deployment of the Empire's newest starfighter, the Missile Boat.