An item whose value or performance changes in reaction to non-financial risks or developments that are not specific to a party to the contract. Non-financial variables that are not specific to a party to the contract include an index of losses arising from natural disasters (earthquake, floods, etc.) in a particular region and an index of temperatures in a particular city.
By nature, this type of variables has to do with the overall risk environment within which an entity to a contract operates, rather than to those non-financial risks that a party to the contract is solely exposed to.
