Question

An entity's risk assessment process:

a) is established only if the entity is subject to unusually high risk.
b) is designed to help an entity think about risk in the same way that an auditor thinks about risk.
c) is the entity's process for identifying and responding to business risks and the results of those risks.
d) never allows management of an entity to decide to accept a risk without taking any action.

Answer 1

The entity's risk assessment process is the process of identifying and responding to business risks and their outcomes. It helps businesses think about risk like auditors do and ensures that risks are addressed and not ignored.

Step-by-step explanation:

An entity's risk assessment process is the entity's process for identifying and responding to business risks and the results of those risks. It is not limited to entities subject to unusually high risk and is designed to help an entity think about risk in the same way that an auditor thinks about risk.

Management of an entity is not allowed to decide to accept a risk without taking any action as part of the risk assessment process.

Overall, the risk assessment process is crucial for businesses to identify potential risks and develop strategies for managing and mitigating them.