In response to a risk identified during a fraud risk assessment, management decides to implement additional internal control measures. This response is known as:
Risk mitigation refers to implementing controls or measures to reduce the likelihood or impact of a risk.
In this case, by implementing additional internal controls, management aims to mitigate the identified fraud risk.
Definition of Other Options:
A. Assuming the risk:This refers to accepting the risk without taking action to mitigate it. This is generally done when the risk is deemed tolerable.
C. Avoiding the risk:This involves changing business practices or ceasing activities to eliminate the risk entirely.
D. Transferring the risk:This occurs when the responsibility for the risk is shifted to another party, such as through insurance.
Conclusion:The described response clearly aligns with risk mitigation, as it focuses on reducing the risk through internal control measures.
[References:ACFE study materials on fraud risk assessment and management approaches​​., , , ]
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