What is the main purpose of conducting fraud risk assessments?

The primary purpose of conducting fraud risk assessments is to identify and evaluate the likelihood of fraud. This process involves analyzing an organization’s operations, controls, and overall environment to recognize potential areas where fraud could occur. By identifying these vulnerabilities, organizations can implement appropriate controls and preventive measures to mitigate the risk of fraud occurring.

Understanding the likelihood of fraud not only helps in safeguarding assets but also enhances the integrity of financial reporting and helps maintain stakeholder trust. The awareness gained through these assessments is crucial in developing strategies to protect against fraudulent activities effectively.

Other options revolve around different aspects of business operations, such as reducing costs, assessing performance, or streamlining processes, but they do not specifically address the central objective of fraud detection and prevention that a fraud risk assessment is designed to target.