Risk Categories by COSO
The COSO framework categories risks as Operations, Financial Reporting, and Compliance. This categorization is illustrated below:
- Efficiency and effectiveness of operations-e.g., the company does not meet strategic objectives, the process does not operate efficiently, customers are not satisfied with services received, etc.
- Financial Reporting-e.g., the absence of a key financial control causes a material error in the financial statements.
- Compliance with laws and regulations-e.g., the company is in violation of applicable regulatory requirements.
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