In your textbook provides an overview of the risk assessment process. Note the focus on the entity itself regulatory factors, business risks, external events. Even the type of business itself. For example, we would agree that a construction company has a higher risk on many levels than a small not-for-profit. Think about a bank and identify risk factors in this company.

This response should be 200-250 words in length

Assessing Business Risks Obtaining an understanding of the entity and its environment is a continuous, dynamic process of gathering, updating, and analyzing information throughout the audit. The goal of this process is to assess the business risks faced by the entity and how those risks are controlled or not controlled by the entity. Based on this knowledge, the auditor assesses the risk of material misstatement at the assertion level. Figure 4-2 provides an overview of the auditor's assessments of business risks and the risk of material misstatement i.e., the auditor's risk assessment process). Unless otherwise stated in the text, the risk of material misstatement refers to misstatements caused by errors or fraud. FIGURE 4-2 An Overview of the Auditor's Risk Assessment Process Perform risk assessment procedures: Inquiries of management and others . Analytical procedures, and Observation or inspecton to obtain an understanding of the ontity and its environment Industry, regulatory & external factors Entity performance measures Nature of the entity strategies, & businesS isks Intemal control Identfy busness risks that may result in material misstatements in the financial statements. Evaluate the entity's risk assossment process (ie how managementresponds) to those business risks and obtain evidence of its implementation. Assess the risk ofmaterial misstatement at the financial statement and assertion levels