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What is meant by âlowering detection riskâ in auditing? A practitioner (or simply auditor) performing audit engagement is required to reduce audit risk to such level that is suitable to provide reasonable assurance to the intended users.
Risk response strategies are the approaches we can make to dealing with the risks we have identified and quantified. In the section on risk quantification we discussed evaluating the risk in terms of its impact and probability in such a way that we would be able to rank risks in their order of importance. This is what we called severity, the combination of impact and probability. Risk response strategy is really based on risk tolerance, which has been discussed. Risk tolerance in terms of severity is the point above which a risk is not acceptable and below which the risk is acceptable. Several strategies are available for dealing with risks. These are avoidance, acceptance, transfer, and mitigation (see RISK STRATEGY).