7.03

Risk Assessment

Principle 7 - Identify, Analyze, and Respond to Risks

Attribute 7.03 - To identify risks, management considers the types of risks that impact the entity. This includes both inherent and residual risk. Inherent risk is the risk to an entity in the absence of management's response to the risk. Residual risk is the risk that remains after management's response to inherent risk. Once risk responses have been developed to address inherent risk, management then considers the impact or significance of the residual risk that remains and whether it is at an acceptable level within the defined risk tolerances. Assessing inherent and residual risk can assist management in understanding the extent of risk responses needed. Management's lack of response to either type of risk could cause deficiencies in the internal control system.

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Election Anomalies

Principle 7 addresses the need to Identify, Analyze, and Respond to Risks. The identification and analysis of risk are presumed to have been performed at the state level, which are addressed in the Arizona Secretary of State's Election Procedure Manual. The MC leadership team's Response to Risk is the primary governance weakness with respect to the Green Book's Principle #7, including this attribute.