Certification in Risk Management Assurance (CRMA) Practice Exam 2025 - Free CRMA Practice Questions and Study Guide

External risks are those that originate outside the organization and can impact its operations, reputation, or financial performance. These risks can come from a variety of sources, including changes in regulatory environments, economic fluctuations, natural disasters, political instability, and technological advancements that are beyond the organization's control.

Understanding external risks is crucial for effective risk management, as these factors can significantly influence an organization’s strategic decisions and operational processes. Organizations must be prepared to identify and assess external risks to create appropriate strategies for mitigation and response.

In contrast, risks originating within the organization are considered internal risks, and risks that do not affect operations or are solely financial do not fully encompass the broader spectrum of external risks that could influence an organization’s success. Therefore, recognizing the external nature of certain risks allows an organization to strategically address potential challenges that arise from its external environment.