# [Answer] What does “residual risk” mean in the RM process?

###### Answer: Risk that remains after all controls have been selected
What does “residual risk” mean in the RM process?

The residual risk is the amount of risk or danger associated with an action or event remaining after natural or inherent risks have been reduced by risk controls. The general formula to calculate residual risk is ${\displaystyle {\text{residual risk}}=({\text{inherent risk}})-({\text{impact of risk controls}})}$ where the general concept of risk is (threats × vulnerability) or alternatively (severity × probability).

An example of residual risk is given by the use of automotive seat-belts . Installation and use of seat-belts reduces the overall severity and probability of injury in an automotive accident ; however probability of injury remains when in use that is a remainder of residual risk.

An example of residual risk is given by the use of automotive seat-belts . Installation and use of seat-belts reduces the overall severity and probability of injury in an automotive accident ; however probability of injury remains when in use that is a remainder of residual risk. In the economic context residual means “the quantity left over at the end of a process; a remainder” In the property rights model it is the shareholder that holds the residual risk and therefore the residual profit.

Inherent risk in Risk management is an assessed level of raw or untreated risk; that is the natural level of risk inherent in a process or activity without doing anything to reduce the likelihood or mitigate the severity of a mishap or the amount of risk before the application of the risk reduction effects of controls. Another definition is that inherent risk is the current risk level …

Definitions. The Certified Information Systems Auditor Review Manual 2006 produced by ISACA an international professional association focused on IT Governance provides the following definition of risk management: “Risk management is the process of identifying vulnerabilities and threats to the information resources used by an organization in achieving business objectives and deciding what …

Introduction. A widely used vocabulary for risk management is defi…