Risk Assessment

1. In capital budgeting, methods used to identify and quantify the relative risk of a project. In auditing, a systematic process for exercising and integrating professional judgments about potential adverse conditions and events.
2. As a component of the Internal Control�Integrated Framework (the Framework), risk assessment includes the risk of material misstatement of financial statements. As a component of Enterprise Risk Management�Integrated Framework (ERM), the concept is broadened to embrace the evaluation of risk as part of overall operational management and the criteria and techniques that might be used to fully assess risk.