Classification of individual business risk, Auditing

Classification of Individual Business Risk

Individual business risk can be low or high impact and low or high likelihood. Here are some illustrations for a satirical magazine.

 

971_Untitled.jpg

What can management do about risks once they are identified? Obviously what to do based on the risk and there are an infinite variety of risks. One possible categorization of potential reactions by management is as follows:

 

  • Do nothing and hope for the best
  • Develop internal controls
  • Develop quality controls over production of goods, production of services, staff recruitment
  • Join in government schemes like Famine Relief or Poverty Reduction
  • Train staff
  • Diversify – acquisition, new products, multiple sourcing, adding to customer base perhaps by exporting
  • Risk reduction–raising staff awareness of risk, tighter discipline in all areas, physical measures such as sprinklers.  Diversified computer systems instead of one complex one
  • Transfer of risk – by insurance, sub-contracting, outsourcing
  • Avoidance – e.g. leaving a market such as the USA to avoid product liability

 

In the end, the business of the entrepreneur is risk raking and all risk cannot be removed. The fundamental economic truism is that there is a correlation among risk and return and high returns are not possible with any risk.

 

Posted Date: 12/3/2012 6:23:35 AM | Location : United States







Related Discussions:- Classification of individual business risk, Assignment Help, Ask Question on Classification of individual business risk, Get Answer, Expert's Help, Classification of individual business risk Discussions

Write discussion on Classification of individual business risk
Your posts are moderated
Related Questions
A municipal village or a nonprofit organization solicits bids for the annual audit from local audit firms, and the firm with the lowest bid is selected. Answer the following que

(a) State the FIVE threats contained within Auditor's Code of Ethics and Conduct and for each threat list ONE example of a circumstance that may create the threat. (b) You a

International, Assurance Auditing, Standards Board (IAASB) The prologue to the International Standards on Quality Control, Auditing, Assurance and Related Services is issued to

e following situations involve a possible violation of the MIA ByLaws (on professional ethics, conduct and practice). For each situation, (1) decide whether or not the Code has bee


Business Risk Approach This approach requires the auditor to determine what are the very important business risks which the client faces. This line of approach both helps the c

Co-operative Societies and Parastatals Co-operative Societies An audit in this case is carried out as a general audit except you should notice that the auditor is appoi

Audit of Holding Companies and Group Accounts Authoritative documents are as: The Companies Act Cap 486 IAS 27 IAS 28 IAS 31 IFRS 3 ISA 600 r

YvesLaurent has just been put in charge of the BeautyNatural Inc. audit.BeautyNatural is a small, but growing retail chain of natural cosmetics stores. BeautyNatural needs to borro

Case Study: Hide-It (HI), a family-owned business based in Tombstone, Arizona builds custom homes with special features, such as hidden rooms and hidden wall safes. Hide-It has