External supply chain risks

External risks can be driven by events either upstream or downstream in the supply chain.

There are 5 main types of external risks:

1. Demand risks – caused by unpredictable or misunderstood customer or end-customer demand
2. Supply risks – caused by any interruptions to the flow of product, whether raw material or parts, within your supply chain
3. Environmental risks – from outside the supply chain; usually related to economic, social, governmental, and climate factors, including the threat of terrorism
4. Business risks – caused by factors such as a supplier’s financial or management stability, or purchase and sale of supplier companies
5. Physical plant risks – caused by the condition of a supplier’s physical facility and regulatory compliance.