Topic 1: Risk and Control Terminology

Risk - the possibility of an event occurring that will have an impact on the achievement of objectives. It is measured using likelihood and impact.

Control - is any action taken by management, the board and other parties to manage risk and increase the likelihood that established objectives and goals will be achieved. Management plans, organizes and directs the performance of sufficient actions to provide reasonable assurance that objectives and goals will be achieved.

Points to note regarding risks:

• Risks begins with strategy formulation and objective setting
• Risk does not present a single point estimate, it represents a range of possibilities
• Risk may relate to preventing bad things from happening or failing to ensure good things happen
• Risk are inherent in all aspects of life, risks associated with conducting a form of business are considered business risk.