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Completing a functional analysis (B4.131) of transactions between associated enterprises to determine the relevant conditions and economic circumstances around those transactions would not be complete without a risk analysis. In the open market the assumption of risk by an enterprise would be expected to be compensated by an increase in return to the enterprise. The risks attaching to a transaction can be harder to identify than the functions performed or assets used and establishing which enterprise bears the risk can also be complicated. Under the ¹ the process for analysing risk in a controlled transactions is summarised as follows:

1. Ìý

   •ÌýÌýÌýÌý identify the specific, economically significant risks

2. Ìý

   •ÌýÌýÌýÌý determine how these risks are contractually assumed by the associated enterprises

3. Ìý

   •ÌýÌýÌýÌý determine how the relevant associated enterprises operate and manage these risks especially which enterprises perform control and risk mitigation functions

4. Ìý

   •ÌýÌýÌýÌý determine if the contractual assumption of risk matches the with the conduct of the associated enterprises and whether the enterprise assuming risk has the necessary financial capacity and