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Risk Management FAQ


What is residual risk?

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It is typically defined as the remaining uncertainty in a strategy (or plan or process) taking into account all of the mitigating steps that are built into that strategy. The word "residual" is used to differentiate it from the concept of "inherent" risk. But inherent risk may simply be a fallacy. See this blog post for more about this.

Regardless, unless one is interested in explicitly dealing with the philosophical difference between inherent and residual risk, the term is irrelevant. Residual risk is simply — risk.