Question

What are different Types of Risks? Explain the importance of auditing in reducing information risk, the causes of information risk, and explain how this risk can be reduced.

Answer 1

1. What are different Types of Risks?

2. Explain the importance of auditing in reducing information risk.

3. The causes of information risk.

4. Explain how this risk can be reduced.

Refer to the below images for more detailed information.

what are different types of Disnes ? Answer: Types of Risks : 1. project Risk 2. Business Desk 3- Information Risk of the project 1. project Risk: It that is the inherent risic is being planned. 2. Business Risk : It is the impact The company that is Business Risk is the exposures inherent of project failure on undertaking the project. totality of business in undertaking the project- 3. Information Risk : It is the probability that the information circlated by a company will be false (or) misleading Auditing can have a significant et this. of auditing in reducing Explain the importance information Viska Information risk reflects the possibility that the information upon which a business deasion wal made was inaccurate. Auditing of financial information redous information SisiL to the users of financial information.

The causes of information Risk : Is Remoteness of information: knowledge Decision must rely Makers do not on information have first hand isrovided by others. and 2o Brases and motives of the provider: Information is provided by someone whose goals are inconsistent with those of the decision maller and may be biased. Voluminous data : Higher volumes of transactions increase the likelihood of undetected errors. complex exchange transactions : 4' Transactions are more difficult to record Standards are difficult increasingly properly. to interpret complex and Complex accounting and apply.

Explain how this risk can be reduced : 1. user - verities information : The user may go information - This is to often the business to verity costly & impractical. the a. user shares information risk with management: - Management is responsible for providing information and may be held responsible in a it inaccurate information is provided. reliable lawsuit 3- Audited financial Statements are provided : External auditors are engaged to that the financial Statements are provide relia assurance