What is the remaining risk after management has implemented a risk response?

What is the remaining risk after management has implemented a risk response?

• A. ROI
• B. Residual risk
• C. Current risk
• D. Detection risk

Answer: (B)

Residual risk is the risk that remains after management has put in place risk responses and controls. Even after implementing mitigations, some level of risk cannot be eliminated because the cost of additional controls may exceed the benefit, or because some risk is inherent in operations. This leftover risk is what the organization must still monitor and accept within its risk tolerance. ROI is not a risk concept; it measures return on investment. Detection risk is about the possibility that a control or audit process fails to detect a material misstatement, which is a different context. Current risk isn’t the standard term for the post-control level in risk management. The remaining, post-mitigation risk is residual risk.

Residual risk is the risk that remains after management has put in place risk responses and controls. Even after implementing mitigations, some level of risk cannot be eliminated because the cost of additional controls may exceed the benefit, or because some risk is inherent in operations. This leftover risk is what the organization must still monitor and accept within its risk tolerance.

ROI is not a risk concept; it measures return on investment. Detection risk is about the possibility that a control or audit process fails to detect a material misstatement, which is a different context. Current risk isn’t the standard term for the post-control level in risk management. The remaining, post-mitigation risk is residual risk.