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Question

XYZ Ltd. Conducts quarterly review of operations. It discovers that unrest in a south east Asian country may affect the supply of raw materials to it the next quarter. This is an example of _____________ .

A
Risk assessment
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B
Control procedure
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C
Supervision
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D
Control environment
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Solution

The correct option is A Risk assessment
Risk is assessed keeping in mind various circumstances. Various risks are associated with the business even if company has/ does not have a global exposure.
In the given question, since an unrest is discovered in south east Asian country, it would directly/ indirectly affect the functioning of the company XYZ Ltd. due to its dependency for supply of raw material.

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