What does residual risk refer to?

Residual risk refers specifically to the risk that remains after an organization has taken steps to mitigate or control identified risks. When an organization implements risk management strategies, such as policies, procedures, and controls, the goal is to reduce risks to an acceptable level. However, it's important to recognize that some level of risk may still persist. This leftover risk is what is known as residual risk.

Understanding residual risk is crucial for effective risk management because it helps organizations assess how much risk is acceptable and ensures that they are aware of any potential vulnerabilities that could impact their operations. Organizations must continually monitor and assess this residual risk to make informed decisions about their risk management strategies and ensure they are prepared for any potential issues that may arise.