Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 208

When estimating the impact of an inherent risk, which of the following should internal auditors consider?

Answer options

• A. The probability and frequency of occurrence.
• B. Financial and nonfinancial factors related to the risk.
• C. The number of risks identified on the heat map.
• D. The residual risk following implementation of appropriate controls.

Correct answer: B

Explanation

The correct answer is B because understanding both financial and nonfinancial factors is crucial for a comprehensive risk assessment. Options A, C, and D do not encompass the full scope of considerations that should be taken into account when estimating the impact of inherent risk.