In risk management, after measures have been taken to prevent or control risks, some risks will still remain.
These are known as residual risks.
* Inherent Risk:
* The risk present before any control measures are applied.
* Residual Risk:
* The risk that remains after preventive and control measures have been implemented.
* It is the risk that the organization decides to accept and manage, rather than eliminating entirely.
* Control Risk:
* The risk that controls will fail to prevent or detect a risk.
* Credit Risk:
* The risk of a financial loss due to a borrower's failure to repay a loan.
Residual risk is the remaining risk after all control measures are applied.
References: Risk management frameworks and standards, such as ISO 31000.