As well as physical threats from the external environment such as infrastructure disruption, financial crime, floods, terrorism, computer viruses and malicious attacks, businesses are subject to continual exposure from political, regulatory, legal, economic, social and technological change as well as competitor activity and industry change.

Developing a structured risk approach integrated with the enterprise risk framework enables a company to reduce the key exposures whilst also making the most of its opportunities.

Luxon Risk Systems can develop an effective and proportionate approach to the management of external risks and fully integrate with other risk management processes.

A structured approach to risk monitoring of the environment is crucial. Key external risks include:

Infrastructure disruption. Loss of power, water, cable/ phone lines, mobile and satellite connections, road, rail and air disruption.

Economic environment. Interest rates, inflation, deflation, economic growth, public confidence.

Social trends. Political activism e.g. G8 protests, green movement and awareness, increased litigation culture, shareholder and customer activism, ageing population.

Terrorism. Loss of key personnel, disruption to travel plans, loss of business confidence.

Financial markets. Apart from severe events such as the recent financial crisis, there are many other financial circumstances of less severity that can impact UK firms. Volatile commodity prices and other types of uncertainty can unduly affect firms that are not vigilant.

External crime. Criminal gangs infiltrating customers and suppliers, internet-based fraud, theft, criminal damage, market manipulation, money laundering.

Competitor activity. Risk managers within firms must be constantly aware of the competitive landscape and the activities of key competitors.

Technological changes. Changes in technology bring about the wholesale restructuring and demise of whole industries. The whole way of doing business for many sectors is being changed by the rapid growth in Web, Internet, IT and communications technologies.

Political risk. The rapid changes in the world’s political landscape has repercussions for UK firms, both positive and negative including potential disruption of fuel supplies, essential commodities and transport links.

Floods and other natural disasters. Although the UK is not subject to events as severe as those witnessed abroad, UK companies are exposed through foreign holdings. There are also UK based natural disasters such as snow and floods.

Pandemic. This is a high impact but low probability event, although this cannot be properly assessed due to it being an extremely rare and unpredictable event.