Question

As a tax accountant, you capture financial information from clients, along with personal information (e.g. birth dates, addresses, Social Insurance Numbers), to prepare their tax returns. what are the threats, likelihood, exposure/impact and risk management strategy?

Answer 1

Tax accountants face significant threats related to data breaches and identity theft which can lead to financial and reputational damage. Risk management strategies involve stringent cybersecurity measures, regular audits, and compliance with regulations to protect sensitive client information.

Step-by-step explanation:

As a tax accountant, managing the security and privacy of the personal and financial information of clients is crucial. The most pressing threats include data breaches, identity theft, and unauthorized access, which could lead to serious financial and reputational damage for both clients and the tax preparation firm. The likelihood of these events is increasingly significant given the rising number of cyber attacks. The exposure/impact of such threats can be considerable, possibly resulting in financial loss, legal repercussions, and loss of client trust.

Effective risk management strategies include implementing stringent cybersecurity measures, such as encryption, regular security audits, multi-factor authentication, and staff training on data privacy. Additionally, maintaining a robust response plan for any data breaches that may occur is essential. Regularly updating internal policies to comply with the latest regulations can also mitigate risks associated with handling sensitive client information.