Lesson: Risk Assessment

In this lesson, Nick Palazzolo, CPA, dives into the realm of risk assessment, detailing how identifying and analyzing risks is crucial to an entity's objective achievement. He urges a focus on establishing objectives to aid in pinpointing and evaluating risks, highlighting areas of concern that could potentially impact an organization, and underscores the importance of recognizing the potential for fraud. Drawing attention to the fraud triangle, Nick explains the three common motivators behind fraudulent behavior and its relevance to risk assessment. Furthermore, he emphasizes the necessity to identify and assess changes that could compromise internal controls, such as shifts in leadership, external influences, or modifications to the business's fundamental operations. Remember, getting a grip on these four components of risk assessment is not just about passing the exam, but understanding their application in real-world scenarios.