What type of risk is minimized when acceptable risk is achieved?

What type of risk is minimized when acceptable risk is achieved?

• A. Transferred risk
• B. Control risk
• C. Residual risk
• D. Inherent risk

Answer: (C)

Achieving an acceptable level of risk involves implementing strategies and controls to reduce the level of risk to a point where it aligns with the organization’s risk appetite. Residual risk refers to the remaining level of risk that persists after all risk mitigation measures have been applied. Therefore, when acceptable risk is achieved, it indicates that the residual risk has been effectively identified and managed, leading to a situation where the risk is at a level that is tolerable for the organization. In contrast, transferred risk involves shifting the responsibility of risk to another party, such as through insurance. Control risk pertains to the potential for a risk management or control measure to fail. Inherent risk is the level of risk that exists in the absence of any controls or mitigations. Thus, focusing on achieving an acceptable level of risk directly relates to managing and minimizing residual risk, making it the correct choice.

Achieving an acceptable level of risk involves implementing strategies and controls to reduce the level of risk to a point where it aligns with the organization’s risk appetite. Residual risk refers to the remaining level of risk that persists after all risk mitigation measures have been applied. Therefore, when acceptable risk is achieved, it indicates that the residual risk has been effectively identified and managed, leading to a situation where the risk is at a level that is tolerable for the organization.

In contrast, transferred risk involves shifting the responsibility of risk to another party, such as through insurance. Control risk pertains to the potential for a risk management or control measure to fail. Inherent risk is the level of risk that exists in the absence of any controls or mitigations. Thus, focusing on achieving an acceptable level of risk directly relates to managing and minimizing residual risk, making it the correct choice.