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Inherent Risk
Inherent risk, in risk management, is an assessed level of raw or untreated risk; that is, the natural level of risk inherent in a process or activity without doing anything to reduce the likelihood or mitigate the severity of a mishap, or the amount of risk before the application of the risk reduction effects of controls. Another definition is that inherent risk is the current risk level given the existing set of controls, which may be incomplete or less than ideal, rather than an absence of any controls. Inherent risk is contrasted with residual risk, which is the amount of risk left after treatment and added security measures. See also * Inherent risk (accounting) Inherent risk, in a financial audit, measures the auditor's assessment of the likelihood that there are material misstatements due to error or fraud in segment before considering the effectiveness of internal control. If the auditor concludes that ..., particularly, the consideration of the probability of material ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Risk
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences. Many different definitions have been proposed. The international standard definition of risk for common understanding in different applications is “effect of uncertainty on objectives”. The understanding of risk, the methods of assessment and management, the descriptions of risk and even the definitions of risk differ in different practice areas ( business, economics, environment, finance, information technology, health, insurance, safety, security etc). This article provides links to more detailed articles on these areas. The international standard for risk management, ISO 31000, provides principles and generic guidelines on managing risks faced by organizations. Definit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Residual Risk
The residual risk is the amount of risk or danger associated with an action or event remaining after natural or inherent risks have been reduced by risk controls. The general formula to calculate residual risk is : \text = (\text) - (\text) where the general concept of risk is (threats × vulnerability) or, alternatively, (severity × probability). An example of residual risk is given by the use of automotive seat-belts. Installation and use of seat-belts reduces the overall severity and probability of injury in an automotive accident; however, probability of injury remains when in use, ''that is'', a remainder of residual risk. In the economic context, residual means “the quantity left over at the end of a process; a remainder” In the property rights model it is the shareholder that holds the residual risk and therefore the residual profit A residual is generally a quantity left over at the end of a process. It may refer to: Business * Residual (entertainment industry ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inherent Risk (accounting)
Inherent risk, in a financial audit, measures the auditor's assessment of the likelihood that there are material misstatements due to error or fraud in segment before considering the effectiveness of internal control. If the auditor concludes that a high likelihood exist, the auditor will conclude that inherent risk is high. See also * Inherent risk * Control risk References {{reflist * Jackson & Stent, 2010: Auditing Notes for South African Students (7th Edition) Auditing terms ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
