Set it to run automatic audio output settings. HDMI is an intelligent interface that will actually figure out which audio streams will work and which will not. Setting it up manually when you are unsure is not advised, although I would simply never set it up manually when using HDMI.
The reason it could damage your speakers is if you have an incoming signal that the receiver cannot handle and it will output a clipped waveform over your speakers, first making a terrible racket and potentially damaging the high frequency drivers of your speakers if the output level on the receiver is too high.