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SAHL HIJAZI , Purchasing Manager , BINZAFRAH GROUP
The difference between inherent risk and control risk?
Inherent Risk is embeded in the Model or the structure of the Company, such as Banks and financial institutions have an inherent risk of Robbery as cash is being handled at high volumes.This cant be controlled due to the basic structure of the business.
Control Risk on the contrary is the Risk due to Internal Control implemented in order to minimize material misstatements. Management designs the internal control system in order to prevent material misstatement occurence.
Inherent risk is the initial, uncontrolled, un-mitigated risk you quantify as part of your risk identification and assessment process. Risk controls, are the things that you do to prevent the risk from materialising or to reduce the impact of the risk should it happen. The key is to quantify your risk using an impact and probability matrix, then decide what risk controls you can develop to reduce or eliminate the risk. Just as important is monitoring the risk and the effectiveness of the controls once you've defined them. Only by monitoring the performance of the risk control can you understand how effective it is. Once you've applied risk controls to the risk you should impact assess the risk again (with the benefits of the control this time) to give you your residual risk.
INHERNT RISK IS AN ACCOUNT HAVE RISK BY ITS NATURE LIKE CASH AND INVENTORY
CONTROL RISK IS AN OPERATION WHICK WE CAN DECREASE THE RISK COME THIS ACCOUNTS
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Nancy Refai , Health, safety and environmental management Trainer and consultant , Freelancer
inherent or gross risk is the original level of risk (impact × probability ) before any risk treatment options are applied ... I.e the possibility of a building to be damaged by a fire .
The controlled risk or residual risk is the level of risk after treatments are applied... I.e the level of risk of fire damage in a building after fire extinguishers were provided and evacuation trainning was given to residents
