Britannica Dictionary definition of LOW–RISK. 1. : not likely to result in failure, harm, or injury : not having a lot of risk. low-risk investments.
When detection risk is set at low, then that means that risk of material misstatement was assessed to be high. Since detection risk is set at low, that means that the audit team will have to perform a HIGHER amount of substantive testing in order to reduce the risk of not detecting a material misstatement.
Low-Risk Investment
There is also less to gain—either in terms of the potential return or the potential benefit bigger term. Low-risk investing not only means protecting against the chance of any loss, but it also means making sure that none of the potential losses will be devastating.
A lower risk/return ratio is often preferable as it signals less risk for an equivalent potential gain.
A low level of risk is one where an event is unlikely or would result in a trivial or minor injury/illness with little or no time off work. A medium level of risk is in between these two, e.g. an event that is reasonably likely and could result in several days off work.
P/E ratio, or price-to-earnings ratio, is a quick way to see if a stock is undervalued or overvalued. And so generally speaking, the lower the P/E ratio is, the better it is for both the business and potential investors.
So, remember, risk and return always go hand-in-hand - when one is low, so is the other one, and vice-versa.
To establish Risk Rating multiply “Likelihood” by the “Severity” Assessed Rating Bands. Minimal Risk - Rating of 1 or 2. Low Risk - Rating of 3 or 4.
Ordinarily, effective internal control equates to a Low control risk assessment (assuming that controls were tested for a sufficient period), and ineffective internal control equates to a High control risk assessment.
Detection risk is the risk that audit evidence for any given audit assertion will fail to capture material misstatements. If the client shows a high detection risk, the auditor will likely be able to detect any material errors. The auditor will react by reducing substantive testing.
Investment portfolios often include a mix of high- and low-risk investments. Riskier investments have the potential for bigger losses—but there's also the opportunity for larger gains. Low-risk investments, on the other hand, are seen as safer bets that typically pull smaller returns.
Not likely to harm or injure. innocuous. safe. harmless. secure.
Low Risk Work requires minimal advance planning, preparation, formal training, or work controls.
likely to be successful, or unlikely to be connected with danger or problems: He stressed that the takeover is "a very low-risk deal."
Low-risk offenders have been convicted of nonviolent offenses such as mail fraud or filing false tax returns and have no backgrounds that include an intensive prior criminal record, mental illness, violent behavior, criminal associations, or current drug abuse.
What is a low risk investment? Precisely what it says on the tin. An investment where there is perceived to be just a slight chance of losing some or all of your money.
In investing, risk and return are two sides of the same coin; low risk generally means low expected returns, while higher returns are usually accompanied by higher risk. Investors can take the do-it-yourself approach or employ the services of a professional money manager.
Experts typically recommend a diversified portfolio containing a mix of low, moderate, and high-risk assets tailored to your goals, timeline, and risk tolerance. Some higher-risk assets allow for growth potential, while maintaining a core of stable investments hedges against volatility.
For lenders, a low ratio means a lower risk of loan default. For shareholders, it means a decreased probability of bankruptcy in the event of an economic downturn. A company with a higher ratio than its industry average, therefore, may have difficulty securing additional funding from either source.
Debt-to-Equity Ratio
A higher ratio indicates a greater reliance on debt and higher potential financial risk. A healthy debt-to-equity ratio varies across industries, but as a general rule of thumb, a ratio above 2:1 is considered excessive debt.
What is a good return on equity? While average ratios, as well as those considered “good” and “bad”, can vary substantially from sector to sector, a return on equity ratio of 15% to 20% is usually considered good.