What type of risk includes natural disasters and unforeseen events?

The correct answer is the type of risk known as force majeure. This term specifically refers to extraordinary events or circumstances beyond the control of the parties involved in a contract, which can prevent one or both parties from fulfilling their contractual obligations. Natural disasters, such as earthquakes, floods, and hurricanes, are classic examples of force majeure events.

Force majeure clauses are often included in contracts to outline the rights and responsibilities of the parties in the event that such unpredictable situations arise. They allow for a degree of flexibility in contract performance when an unforeseen event disrupts normal operations.

In contrast, operational risk pertains to risks arising from internal processes, people, and systems or from external events that affect the operations of an organization, but these do not typically encompass natural disasters as defined by force majeure. Financial risk generally relates to the potential for financial loss due to market fluctuations or other economic factors, and legal risk refers to the possibility of facing legal penalties or litigation; neither of these encompass the unpredictable nature of force majeure events.