External risks are generally something that is uncontrollable by the first party.

In contract law

contract law A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more Party (law), parties. A contract typically involves consent to transfer of goods, Service (economics), services, money, or pr ...

, are risks that are produced by a non-human source and are beyond

human Humans (''Homo sapiens'') or modern humans are the most common and widespread species of primate, and the last surviving species of the genus ''Homo''. They are Hominidae, great apes characterized by their Prehistory of nakedness and clothing ...

control. They are unexpected but happen regularly enough in a general population to be broadly predictable, and may be the subject of

casualty insurance Casualty insurance is a defined term which broadly encompasses insurance not directly concerned with life insurance, health insurance, or property insurance. Casualty insurance is mainly liability coverage of an individual or organization for n ...

. Good examples of external risks are

natural disasters A natural disaster is the very harmful impact on a society or community brought by natural phenomenon or Hazard#Natural hazard, hazard. Some examples of natural hazards include avalanches, droughts, earthquakes, floods, heat waves, landslides ...

such as

earthquakes An earthquakealso called a quake, tremor, or tembloris the shaking of the Earth's surface resulting from a sudden release of energy in the lithosphere that creates seismic waves. Earthquakes can range in intensity, from those so weak they c ...

and

volcanoes A volcano is commonly defined as a vent or fissure in the crust of a planetary-mass object, such as Earth, that allows hot lava, volcanic ash, and gases to escape from a magma chamber below the surface. On Earth, volcanoes are most often fo ...

Insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

adjusters analyze external risks on a normal basis. Measuring risks of the environment is common practice throughout insurance claims. As far as claims go, most external risks, or an "

Act of God In legal usage in the English-speaking world, an act of God, act of nature, or damnum fatale ("loss arising from inevitable accident") is an event caused by no direct human action (e.g. Severe weather, severe or extreme weather and other natur ...

", are protected by

property insurance Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or bo ...

In project management

project management Project management is the process of supervising the work of a Project team, team to achieve all project goals within the given constraints. This information is usually described in project initiation documentation, project documentation, crea ...

; Risks that are external to the project and the project manager cannot control. Good examples of external risks are changes in government

legislation Legislation is the process or result of enrolling, enacting, or promulgating laws by a legislature, parliament, or analogous governing body. Before an item of legislation becomes law it may be known as a bill, and may be broadly referred ...

, changes in

strategy Strategy (from Greek στρατηγία ''stratēgia'', "troop leadership; office of general, command, generalship") is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. In the sense of the " a ...

from senior managers, and the

economy An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

Assessing external risks

Three separate aspects should be analyzed when determining the amount of external risk that exists. # Frequency of Occurrence - What are the odds of an external risk occurring in your situation? Do similar risk situations happen often in your area? This assesses the probability of the external risk. # Duration of the Occurrence - Over what time period will the external risk last? How long will the affected party be at an altered state due to this risk? This assesses the amount of time that would be lost due to the risk and its effects. # Loss of Assets - What types of property could be damaged or destroyed from this risk? This assesses the state of property and assets after the external risk occurs.

References

*Giddens, Anthony (1999). “Risk and Responsibility”. ''Modern Law Journal'', Vol. 62 No. 1, p. 4.

In contract law

In project management

Assessing external risks

References

See also