In ORM, which type of risk is categorized as external?

The type of risk categorized as external in the context of Operational Risk Management is market fluctuations affecting business operations. External risks are those that arise from outside the organization and can impact its performance, often beyond the organization's control. Market fluctuations, such as changes in economic conditions, interest rates, or commodity prices, can lead to significant operational impacts on a business, affecting revenue, costs, and financial stability.

In contrast, the other options pertain to risks that originate within the organization itself. System failures are internal and relate to the technology or processes the organization uses. Employee misconduct concerns the behavior and actions of individuals within the company that can lead to risks. Failures in internal compliance audits are also internal issues that reflect the organization's adherence to regulations and internal policies. Understanding these distinctions is crucial for effective risk management strategies, as it allows organizations to address and mitigate risks based on their sources.