Explain any approaches that can be taken by an auditor to minimize audit risk.

The auditor is required to assess the risks of material misstatements in the financial statements through Understanding the Entity and Its Environment.

Risk of Material Misstatement-

Risk of Material Misstatement (RMM) is the assessment of potential risks of material misstatement based on the client's system. This assessment is made by the auditor by performing either risk assessment procedures and/or test of controls.

There are audit techniques through which risk can be reduced :- Test of Controls, Test of details etc.

Sampling techniques are also there through which auditor can get comfort over evidences.