There are three types of external risk factors: Economic risk, natural risk and political risk, they come up due to economic events that arise from outside the corporate structure.
Explanation:
Economic risk: includes changes in the market conditions
Natural Risk: includes natural disasters that affects natural business operations e.g.: earthquakes for example may affect the ability of a retail business to remain open leading to a sharp decline on overall sales for the month.
Political risk: Changes in the political environment or governmental policy that relate to financial affairs. For example: increases in interest rates, changes in export or import laws, taxes increase among others.
