Risk Assessment Process: A risk assessment process is essential for identifying, analyzing, and managing risks that could prevent the achievement of objectives. It is a critical component in developing an effective system of internal controls.

Importance: Without a risk assessment, organizations cannot effectively design controls that address relevant risks.

COSO Framework: The Committee of Sponsoring Organizations (COSO) Internal Control Framework outlines risk assessment as a fundamental part of internal control systems.

Components: The framework includes risk assessment, control activities, information and communication, monitoring activities, and the control environment.

Other Preconditions:

Monitoring Process: Important for evaluating the effectiveness of internal controls but not the initial step.

Strategic Objective-Setting Process: Critical for overall organizational success but does not directly develop internal controls.

Information and Communication Process: Supports internal controls by ensuring relevant information is communicated but follows the identification of risks.