What role do 'external factors' play in risk assessment within the FAIR framework?

In the FAIR framework, external factors are crucial because they can significantly influence both the likelihood of risk events occurring and the potential impacts those events may have. Understanding external factors helps organizations assess how elements outside their immediate control—such as market trends, regulatory changes, technological advancements, or social dynamics—can affect their risk landscape.

By considering these external factors, organizations gain a more comprehensive view of the risks they face. This broader perspective enables them to make more informed decisions about risk management strategies, resource allocation, and mitigation measures. The interplay between internal operations and external influences is essential for accurately estimating risk and developing robust risk management practices.

Thus, recognizing the impact of external factors enriches the risk assessment process, allowing for a more nuanced and effective approach to managing risk.