Certified Information Systems Auditor Practice Exam

In a risk-based audit, the inherent risk assessment is the first step undertaken by an IS auditor. This assessment aims to identify and evaluate the risks that are present in an organization's processes or information systems before any controls have been applied to mitigate those risks. Inherent risks are the natural risks that exist due to the nature of the business activities and the environment in which the organization operates, without considering the effectiveness of existing controls. This initial assessment sets the foundation for understanding the overall risk landscape and helps auditors prioritize areas for further examination.

Completed after the inherent risk assessment, the residual risk assessment evaluates the risks that remain after controls are in place. The control risk assessment measures the risk that the existing controls might fail to prevent or detect material misstatements. Operational risk assessment, while important, typically takes a backseat to the evaluation of inherent risks in the context of auditing processes. Understanding the inherent risks allows auditors to make informed decisions on what controls are necessary and which areas warrant more intensive examination based on the level of risk present.