Risk acceptance
When management decides to live with a risk instead of fixing it.
Management may choose to accept a risk. If the CAE concludes management has accepted a level of risk beyond the organisation’s appetite, they must discuss it with senior management and, if it isn’t resolved, communicate it to the board.
On the exam
The escalation path is senior management, then the board, not regulators or external auditors.
Related terms
- Risk appetiteHow much risk an organisation is willing to take in pursuing its goals.
- Chief audit executive (CAE)The person who leads the internal audit function.
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