Answer to Question #315841 in Finance for Bismark

Question

what is inherent risk

Answer 1

Inherent risk relates to the natural risk level that exists in a process that has not been controlled or mitigated in risk management. Inherent risk indicates possibility of any material misstatements in financial reporting caused by factors other than internal control failure, e.g. where transactions or complex or a situation that demands a high degree of judgment in regard to financial estimates.