Types of Risk

Question 1

Inherent Risk

Answer 1

Is the risk level or exposure without taking into account the actions that management has taken or might take (implementing controls). Ex., a building in a given area has an inherent risk of flooding based on the characteristics of the land and nearby water.

Question 2

Residual Risk

Answer 2

Is the remaining risk after management has implemented a risk response, which is typically a mitigation activity but may also include risk transfer. Calculated by subtracting the effectiveness of the control from the inherent risk.

Question 3

Current Risk

Answer 3

The term for the risk as it exists in the moment, considering those actions that have already been taken but not actions that are anticipated or have been proposed.