Which of the following risks assumes an absence of compensating controls in the area being reviewed?
Which of the following risks assumes an absence of compensating controls in the area being reviewed?
Inherent risk refers to the natural level of risk that exists in a business process or activity before any controls or mitigating measures are implemented. It assumes an absence of compensating controls, which is why it is the correct answer in this context.
Why not A?
Control risk is a type of risk when controls would not mitigate the risk. Inherent risk is primary risk when we see the process at the point where no controls exists. It is like with Risk assessment - what can happend if no controls are in place? - we assess inherent risk in the process so the business functions lacking controls in place. Hope that helps