Residual Risk Formula:
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Residual risk is the remaining risk after accounting for the impact of risk mitigation measures. It represents the risk that remains even after controls and safeguards have been implemented.
The calculator uses the Residual Risk formula:
Where:
Explanation: The equation calculates the remaining risk by subtracting the effectiveness of mitigation measures from the original risk level.
Details: Calculating residual risk helps organizations understand their true risk exposure after implementing controls, enabling better risk management decisions and resource allocation.
Tips: Enter both inherent risk and mitigation impact as unitless values (typically on a scale like 1-10 or 1-100). The mitigation impact should not exceed the inherent risk.
Q1: What's the difference between inherent and residual risk?
A: Inherent risk is the risk before any controls, while residual risk is what remains after controls are applied.
Q2: Can residual risk be zero?
A: Only if mitigation completely eliminates the risk, which is rare in practice. Most risks can only be reduced, not eliminated.
Q3: How should I scale my risk values?
A: Use a consistent scale (e.g., 1-10 or 1-100) for both inherent risk and mitigation impact to ensure meaningful results.
Q4: What if my mitigation impact exceeds inherent risk?
A: The calculator will show zero, as residual risk cannot be negative. This might indicate overestimated mitigation or underestimated inherent risk.
Q5: How often should residual risk be calculated?
A: Whenever significant changes occur in either the risk environment or mitigation controls, or as part of regular risk review cycles.