Which of the following should an internal auditor take into consideration when making a judgement regarding whether management selected appropriate risk responses?
When evaluating whether management has selected appropriate risk responses, an internal auditor should consider the organization's risk appetite—the amount and type of risk that an organization is prepared to pursue, retain, or take. Risk appetite sets the boundaries within which risk responses should be formulated. Risk tolerance and capacity are related concepts, but risk appetite is a more direct measure of whether a particular risk response aligns with organizational goals and strategy.
Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing
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