What component involves assessing potential risks in the cannabis industry?

The component that involves assessing potential risks in the cannabis industry is risk assessment. This process is critical in identifying, analyzing, and prioritizing risks associated with various aspects of cannabis production, distribution, and sales. Within the cannabis industry, risk assessment allows businesses to systematically evaluate everything from regulatory compliance and market volatility to health and safety concerns, ensuring that proactive measures can be taken to mitigate these risks.

Furthermore, risk assessment serves as a foundational element for effective risk management practices. By accurately identifying potential risks, companies can implement control activities to address those risks, communicate needed information across the organization, and develop assurance measures to instill confidence in their operations and their compliance with laws and regulations. This holistic approach ensures that cannabis businesses remain sustainable and compliant in a rapidly changing industry.