In quantifying the need for Internal Control, we generally look at the risk associated with a particular process or entity. Answer the following questions regarding risk & internal control:

1. What are the two components generally used to assess risk, and what do they mean?

2. Why is an awareness of risk useful for the application of internal control? What would happen if risk were not accounted for in internal control?

3. Give three examples of specific internal controls, and explain a scenario/risk that each would be effective at reducing.