The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released Risk Assessment in Practice, a paper designed to help organizations find the optimal risk-taking zone, which the paper refers to as the “sweet spot.”
“Risk assessment is all about measuring and prioritizing risks so that risk levels are managed within defined tolerance thresholds without being over-controlled or forgoing desirable opportunities,” Deloitte & Touche LLP partner and paper co-author Patchin Curtis said in a news release.
The thought paper, available at tinyurl.com/9t2o7sa, describes a risk assessment process that should be practical, sustainable, and understandable. The enterprise risk management process must be structured, disciplined, and correctly scaled to the organization’s size, complexity, and geographic reach, according to the paper.
Identifying risks requires casting a wide net at first to understand the possibilities that need to be included in the organization’s risk profile, according to the paper. Prioritization then takes place to focus senior management and board attention on key risks.
The risk assessment process outlined in the paper includes:
- Developing assessment criteria.
- Assigning values to each risk and opportunity.
- Considering risk interactions because risks, when combined, can cause compounded damage.
- Prioritizing risks.
- Responding to risks.
The paper advises that the information learned from the risk management process must feed into the strategic planning process to facilitate the proper actions.
The AICPA Health Care Expert Panel developed a series of technical practice aids related to implementing a 2010 FASB Accounting Standards Update (ASU) on insurance.
Technical Questions and Answers (TPA) 6400.49 to 6400.52 provide nonauthoritative guidance on the implementation of ASU No. 2010-24, Health Care Entities (Topic 954): Presentation of Insurance Claims and Related Insurance Recoveries.
The TPAs, available at tinyurl.com/3so64k8, discuss:
- What is meant by “similar contingent liabilities” within the scope of the ASU.
- The accrual of legal costs associated with contingencies other than medical malpractice liabilities.
- The presentation of insurance recoveries when the insurer pays claims directly.
- Insurance recoveries from certain retrospectively rated insurance policies.