Lack of checks and balances is a type of risk known as what?

Lack of checks and balances is a type of risk known as what?

• A. External Risk
• B. Internal Risk
• C. Strategic Risk
• D. Compliance Risk

Answer: (B)

Internal risk is the danger that comes from weaknesses inside the organization, especially in governance and internal controls. Checks and balances—such as separation of duties, independent reviews, and required approvals—are key parts of these controls. When they’re lacking, opportunities for errors, fraud, or misappropriation rise, and processes may not operate as intended. External risk comes from outside the organization, strategic risk relates to long-term goals and external factors, and compliance risk concerns failing to follow laws and regulations. So lacking checks and balances best fits internal risk.

Internal risk is the danger that comes from weaknesses inside the organization, especially in governance and internal controls. Checks and balances—such as separation of duties, independent reviews, and required approvals—are key parts of these controls. When they’re lacking, opportunities for errors, fraud, or misappropriation rise, and processes may not operate as intended. External risk comes from outside the organization, strategic risk relates to long-term goals and external factors, and compliance risk concerns failing to follow laws and regulations. So lacking checks and balances best fits internal risk.