Final answer:
Risk assessment in internal auditing involves identifying and evaluating potential risks, assessing their likelihood and impact, and analyzing controls and mitigation measures.
Step-by-step explanation:
Risk assessment in the context of internal auditing is typically conducted by identifying and evaluating potential risks that could impact the organization's operations, finances, and reputation. This involves assessing the likelihood and potential impact of each identified risk, analyzing existing controls and mitigation measures, and determining the residual risk. The process may include techniques such as risk identification workshops, interviews with key personnel, and review of documentation and procedures.
For example, in a financial audit, the risk assessment may involve identifying potential areas of fraud or financial misstatements, evaluating the adequacy of internal controls and compliance with regulations, and determining the level of inherent risk associated with different financial transactions or accounts.