External risks can be driven by events either upstream or downstream in the supply chain.
There are 5 main types of external risks:
- Demand risks – caused by unpredictable or misunderstood customer or end-customer demand
- Supply risks – caused by any interruptions to the flow of product, whether raw material or parts, within your supply chain
- Environmental risks – from outside the supply chain; usually related to economic, social, governmental, and climate factors, including the threat of terrorism
- Business risks – caused by factors such as a supplier’s financial or management stability, or purchase and sale of supplier companies
- Physical plant risks – caused by the condition of a supplier’s physical facility and regulatory compliance.
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