For audits performed by an outside audit firm, risk assessment is a crucial stage before accepting an audit engagement. According to ISA315 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement , "the auditor should perform risk assessment procedures to obtain an understanding of the entity and its environment, including its internal control". Evidence relating to the auditor’s risk assessment of a material misstatement in the client’s financial statements. Then, the auditor obtains initial evidence regarding the classes of transactions at the client and the operating effectiveness of the client’s internal controls. Audit risk is defined as the risk that the auditor will issue a clean unmodified opinion regarding the financial statements, when in fact the financial statements are materially misstated, and therefore do not qualify for a clean unmodified opinion. As a formula, audit risk is the product of two other risks: Risk of Material Misstatement and Detection risk. This formula can be further broken down as follows: inherent risk × control risk × detection risk .
Science and Decisions: Advancing Risk Assessment (NRC, 2009) (commonly referred to as the “Silver Book”) provided updated recommendations from the NAS aimed at improving technical analysis (by incorporating improvements in scientific knowledge and techniques) and utility of risk assessment for decision making. The Silver Book recommends that risk assessment should be viewed as a method for evaluating the relative merits of various options for managing risk, and not as an end in itself. This has a number of implications for the practice of risk assessment. It implies a greater need for upfront planning of the risk assessment, and the involvement of risk managers, risk assessors, and other stakeholders helps to determine the risk-management questions that risk assessment should address. They also recommended the technical analyses within the risk assessment should be more closely aligned with the questions to be answered.
HERO provides site-specific exposure and health risk assessments at proposed and existing schools in California to ensure protection of some of the state's most sensitive populations. HERO toxicologists provide assistance to DTSC School Evaluation Units on the development of guidance and scientific procedures for assessing the health risks of contaminants at school properties. HERO toxicologists communicate their findings on the health risks of contaminants at school sites and at school site cleanups to DTSC School Evaluation Units, as well as directly to the public, both in written materials and at community meetings.