ESB Certification Practice Exam 2025 – Complete Study Resource

The correct choice is environmental. Natural disasters such as hurricanes, earthquakes, floods, and wildfires fall under environmental risks because they stem from changes in the natural environment that can disrupt business operations. These events can lead to physical damage to property, infrastructure, and resources, resulting in significant financial losses and operational challenges for a business.

Operational risks deal with internal processes, systems, or external events that can affect the day-to-day functions of a company. While natural disasters can indeed impact operations, they are classified more specifically as environmental risks due to their origin and broader implications.

Financial risks typically relate to market fluctuations, credit risks, or issues linked with a company's financial health and funding. They do not align with the nature of natural disasters.

Market risks concern changes in consumer demand or market conditions that affect a business's performance. Again, while market uncertainties can impact a business, they are not tied to the unpredictable events classified as natural disasters.

In summary, when identifying risks, understanding the context is crucial; environmental risks directly relate to incidents in the physical environment, such as natural disasters, making it the most accurate classification in this instance.