Which of the following are external risk factors? Each correct answer represents a complete solution.
Choose three.
Click on the arrows to vote for the correct answer
A. B. C. D.AD.
These three are external risk factors as they lie outside the enterprise's control.
Incorrect Answers: B: This includes geographic spread and value chain coverage (for example, in a manufacturing environment)
That is why it is internal risk factor.
External risk factors are events or circumstances that exist outside of an organization and have the potential to affect its operations or performance. They are beyond the control of an organization but need to be identified, evaluated, and managed to minimize their impact on the organization. The following are the explanations of the options given in the question:
A. Geopolitical situation: This refers to the political, economic, and social conditions of a particular geographic region or country. For instance, changes in government policies, international relations, trade agreements, and conflicts can all impact an organization's operations, supply chain, and revenue streams. An organization needs to monitor and assess geopolitical risks to understand how they could affect its operations.
B. Complexity of the enterprise: The complexity of an enterprise refers to the number of products, services, processes, and systems it uses. A more complex enterprise can be harder to manage and control, leading to increased risk exposure. It can also make it harder to respond to changes in the market or adapt to new regulations.
C. Market: The market refers to the industry or sector in which an organization operates. Factors such as economic conditions, customer preferences, and competition can all impact the organization's performance. For instance, changes in consumer behavior or a recession can lead to a decline in sales or revenue for a business.
D. Competition: Competition refers to the other organizations that provide similar products or services to the same market as an organization. Competition can lead to price pressure, reduced market share, and decreased profitability. An organization needs to assess its competitive landscape and develop strategies to differentiate itself from its rivals.
In summary, all the options given in the question are external risk factors, but the three that specifically fall under this category are geopolitical situation, market, and competition. Complexity of the enterprise can also contribute to external risk factors, but it can also be an internal risk factor, depending on the specific circumstances of an organization.