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Updating a control-weakness probability after an exception flag

A 35% prior, a 75% flag likelihood given weakness and a 15% flag likelihood given no weakness imply approximately 72.9167% weakness probability conditional on a flag.

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Treat the figures as a stated learning model

The event is a control weakness and the evidence is an exception flag. The model supplies the prior and both evidence likelihoods. It does not establish an actual audit result or determine what action a real compliance team should take.

Calculate the probability of a flag under both states

Complete flag calculation
StatePrior weightFlag likelihoodJoint state-and-flag probability
Weakness35%75%26.25%
No weakness65%15%9.75%
Total flag probability36%

Divide by the total flag probability

The weakness-and-flag branch accounts for 26.25% of the complete model. Among the 36% assigned to a flag, the weakness share is 26.25/36 = 72.9167%. The remaining share, 27.0833%, belongs to no weakness despite a flag.

Distinguish three different percentages

35% is the prior before the flag. 75% is the likelihood of a flag given weakness. Approximately 72.9167% is the posterior probability of weakness given a flag. Reusing the likelihood as the posterior reverses the conditioning direction.

Further references