Introduction:

Heat maps are tools used in risk management to visualize the impact and likelihood of risks.

Limitations of Heat Maps:

Despite their usefulness, heat maps have several limitations, including difficulties in prioritizing risks

when impact and likelihood are closely matched.

Options Analysis:

Option A: Impact can be represented qualitatively as well, not just in financial terms.

Option B: Differentiating the relative importance of impact versus likelihood can be challenging,

leading to potential misinterpretation of risk priorities.

Option C: Heat maps can be used without a risk and control matrix, although such a matrix enhances

their effectiveness.

Option D: Qualitative factors can be incorporated into heat maps, adding depth to the analysis.

Conclusion:

The limitation of a heat map is that at times, impact and likelihood cannot be differentiated as to

which is more important, making it difficult to prioritize risks accurately.

Reference:

Internal Audit Standards and Practice Guides .