The process of determining which risks to insure and which applicants to reject is known as

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: Explain the types of risk?

A: Introduction: There is a risk involved in any company decision, and in personal life decisions. In…

Q: Which of the following would not result in exposure to nonsampling risk?a. Measuring the…

A: Sampling: Sampling allows an individual to obtain information about the population of interest in a…

Q: What is the risk of Incorrect Rejection?

A: Risk of incorrect acceptance of internal control reliability and risk of incorrect acceptance of…

Q: isk can be separated into undiversifiable risk and diversifiable risk. Discuss the difference…

A: In market there are many types of risk involved but broadly there are two types of risk…

Q: What is the difference between Test of controls and Substantive procedures, give an example of each…

A: An audit assesses the integrity of a company's financial statements as well as the efficacy of its…

Q: evaluate the main sources of potential financial risk using suitable techniques.  For each risk area…

A: The question is based on the concept of financial risk and different sources of such risk .

Q: Discuss some of the techniques available to reduce risk exposures.

A: Risk exposure is the estimated potential loss from ongoing or upcoming business operations. The…

Q: What is takaful and how it can be used as a risk mitigation tool and write down the names of types…

A: Takaful may be a style of monotheism insurance whereby members contribute cash into a pool system to…

Q: what are the conditions for classical immunization to be not effective?

A: Classical Immunization:- Classical immunization can be characterized as the formation of a fixed-pay…

Q: What types of information must be considered when it comes to risk and return?

A: Risk and return go hand in hand both are related to each other.There is direct correlation between…

Q: In the context of your organization, evaluate its main sources of potential financial risk using…

A: Financial risk: Financial risk is defined as the chance of uncertainty in a financial incident, such…

Q: Define relevant risk

A: For investors, risks are classified into the following two types: Systematic risk/relevant…

Q: how does communication aid in assessing inherent risk, control risk and detection risk

A: Factors of Communication aid in Assessing Inherent Risk, Control Risk and detection Risk There are…

Q: What rules or policies should be developed to avoid the ethical problem?

A: Ethical problems: These kinds of problems arise when while making decisions neither of the options…

Q: What is a reasonableness test?

A: Reasonableness tests is an analytical procedure used to examine the validity of the accounting…

Q: Can both moral hazard and adverse selection occur in the insurance market s the difference between…

A: The insurance industry is an important part of the overall financial industry. Insurance is bought…

Q: Define control risk and detection risk. What is the difference between control risk and detection…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: What three techniques are used to assess stand-alone risk?

A: Stand-alone risk: Stand-alone risk is the risk related with the anticipated project cash flow. The…

Q: Briefly define what an ethical dilemma is and describe thesteps to consider when evaluating ethical…

A: The ethical dilemma describes the steps in evaluating the ethical dilemmas are given below as,…

Q: What are the risks from subversive threats?

A: Taking illegal access over a firm internal system network by doing activity of surpassing the…

Q: What should occur when a low level of Detection Risk is acceptable?

A: Detection risk is the risk that procedures performed to reduce audit risk will not detect a material…

Q: How are total risk, nondiversifiable risk, and diversifiable risk related? Why is nondiversifiable…

A: Total risk is measured by the standard deviation of returns; it has two elements non-diversifiable…

Q: Can moral hazard in the market for insurance exist without adverse selection? Explain

A: Adverse selection refers to a situation in which sellers have information about a product's quality…

Q: what are the difference between Preventive Controls and Detective Controls?

A: Financial Reporting control activities are imposed on the accounting standard for the purpose of…

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: Discuss some of the techniques available to reduce risk exposure.

A: Risk exposure means possible losses which can be occur in future due to specific projects or…

Q: What is the Allowable Risk of Over-reliance?

A: Auditor has to test the account balances and classes of transactions and has to do both control…

Q: What is shared risk? Use an example to explain the shared risk happen and who will involved?

A: Risk means the uncertainty of happening of an event. When the risk is higher than the uncertainty of…

Q: Identify the weakness and the risk relating to the above.

A: Answer: The weakness is the shortcoming in any process and risk is the factor that result due to…

Q: How are the sufficiency and appropriateness of evidence related to detection risk?

A: Audit Evidence:   The pieces of evidence provided by the audit team to prove their opinion with…

Q: Risk is the uncertainty that matters because it affects people’s welfare. Briefly define and give…

A: Diversifiable Risk: Unsystematic Risk is also known as Diversifiable Risk and can be defined as a…

Q: Which of the following is the first stage to be performed in order to properly manage risks? a.…

A: The steps followed to properly manage risks are as follows: 1. Identify the risk 2. Analyse the risk…

Q: Ethical behavior is most likely to be compromised when the

A: Ethical Behavior is most likely to be compromised when the personal ethics of businesspeople are…

Q: What is the implication of the cost of the “wrong decision” in the selection process

A: Selection process refers to the process in which we choose an alternative from all the available…

Q: Distinguish between diversifiable and non-diversifiable risk

A:

Q: Are you able to differentiate between risks that are inherent and those that can be controlled?

A: Inherent risk- A material mis-statement that occurs due to error or due to omission  in the…

Q: Differentiate between systematic and unsystematic risks.

A: Risk refers to the chances or probability of losses due to uncertain situations or conditions. In…

Q: Professional skepticism is

A: Answer with explanation related to Professional Skepticism is given below,

Q: Distinguish between exposure and risk.

A:

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.