Does the back disk on external drive need to be encrypted?

NO disk NEEDS to be encrypted, unless the data on it are required to be encrypted by law, such as Health information subject to HIPPA regulations. If you prefer it, you can encrypt the built-in drive on your MacBook Pro as protection for you if the entire unit is stolen.

If you are confident that your Backup DRIVE is not especially likely to be stolen, it does not need to be encrypted.

Encrypted drives are generally NOT partially recoverable. One serious error and you lose it ALL.

NOT encrypted drives are far, far more likely to produce partial results in the event of a disk problem.