Which of the following is an example of inherent risk?
Which of the following is an example of inherent risk?
Inherent risk refers to the risk that exists in the absence of any actions or controls. The risk of non-compliance with regulations exists inherently, regardless of any internal controls or processes the organization might put in place. Hence, the organization not complying with regulations is an example of inherent risk.
A is an operational risk B is a detection risk C is a compliance risk while D is an inherent risk
Inherent risk is the risk that an organization could encounter when no controls are in place, where residual risk is the risk that exists with controls in place. Therefore, C should be Inherent risk, where D is residual risk.