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Hello everyone. I want to discuss two key elements of audit risk and how they made perfect sense while studying them. So inherent risk is the risk of misstatement assuming no controls are in place, while control risk is the risk of misstatement if the controls dont work. These are the two elements of audit risk that the auditor doesnt control, but are very important.
It is this process to make loss more predictable that is at the core of insurance programs. The key to an economical and efficient risk program is control over the risk management functions with assurance that actions performed are desirable, necessary, and effective to reduce the overall cost of operational risk. A risk management program is formulated and evaluated around the cost of risk.