CRMA Certification Practice Exam 2025 – Comprehensive All-in-One Resource to Master Risk Management Assurance!

Residual risk is defined as the amount of risk that remains after all possible and practical risk management strategies have been applied, including the implementation of controls and mitigation measures. These measures might include policies, procedures, and technological solutions designed to minimize the likelihood or impact of risks.

In the context of risk management, understanding residual risk is crucial for organizations as it helps them gauge the effectiveness of their risk management efforts. Once controls are put in place, there is always a level of risk that cannot be eliminated completely due to various factors such as human error, unforeseen events, or limitations in the controls themselves. Therefore, it is the risk that persists even after all preventive efforts are taken that is referred to as residual risk. Organizations need to monitor and address this residual risk to ensure they are not exposed to potential threats beyond their tolerance levels, which is vital for informed decision-making and strategic planning.