What is inherent risk in SAP GRC-RM - GRC Risk Management?

SAP Term: inherent risk

• Component: GRC-RM

• Component Name: GRC Risk Management

• Description: The initial risk situation with no mitigation or response applied yet. After a response from Risk Management or a control from Process Controls is applied, a residual risk is spoken of.

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• Key Concepts: 
  Inherent risk is the risk of loss that is present in a business or financial transaction due to the nature of the transaction itself. It is the risk that is inherent in the transaction, regardless of any mitigating measures taken by the business. In SAP GRC Risk Management, inherent risk is used to assess the potential impact of a risk on an organization.
  
  How to use it: 
  In SAP GRC Risk Management, inherent risk is used to assess the potential impact of a risk on an organization. The inherent risk score is calculated based on factors such as the complexity of the transaction, the likelihood of a loss occurring, and the potential magnitude of the loss. The score can then be used to determine the appropriate level of control and monitoring for each transaction.
  
  Tips & Tricks: 
  When assessing inherent risk, it is important to consider all potential risks associated with a transaction, not just those that are immediately apparent. Additionally, it is important to consider both qualitative and quantitative factors when assessing inherent risk.
  
  Related Information: 
  In SAP GRC Risk Management, inherent risk can be used in conjunction with other risk management tools such as control testing and monitoring to ensure that risks are properly managed and mitigated. Additionally, it can be used to identify areas where additional controls may be needed or where existing controls may need to be strengthened.