Acceptable Risk is Achieved When

A.

Residual risk is the risk that remains after putting into place an effective risk management program; therefore, acceptable risk is achieved when this amount is minimized.

Transferred risk is risk that has been assumed by a third party and may not necessarily be equal to the minimal form of residual risk.

Control risk is the risk that controls may not prevent/detect an incident with a measure of control effectiveness.

Inherent risk cannot be minimized.

Acceptable risk refers to the level of risk that an organization is willing to accept or tolerate, given its business objectives, constraints, and risk appetite. Achieving acceptable risk involves balancing the potential benefits of an activity against the potential harm or loss it could cause, and taking appropriate measures to reduce or mitigate the risk to an acceptable level.

The four types of risk mentioned in the answers are:

• Inherent risk: The risk that exists in the absence of any controls or countermeasures. It is determined by the nature of the asset, the threats it faces, and the vulnerabilities that could be exploited by those threats.
• Control risk: The risk that remains after controls have been implemented to mitigate the inherent risk. It reflects the effectiveness of the controls in reducing the likelihood and/or impact of a risk event.
• Residual risk: The risk that remains after all mitigation measures have been applied. It is the risk that an organization must live with or accept as part of its risk management strategy.
• Transferred risk: The risk that is shifted to another party, such as an insurer, contractor, or vendor. The risk is still present, but the organization is no longer responsible for it.

Out of the given options, only one can achieve acceptable risk.

The correct answer is A. Residual risk is minimized.

Residual risk is the risk that remains after all mitigation measures have been applied. It is the risk that an organization must live with or accept as part of its risk management strategy. Acceptable risk is achieved when residual risk is minimized to a level that is within the organization's risk appetite and tolerance. This means that the organization has taken all reasonable measures to reduce the risk to an acceptable level, and is prepared to live with any residual risk that remains.

Option B (Transferred risk is minimized) is incorrect because transferring risk to another party does not necessarily reduce the overall risk to the organization. It only shifts the risk to another party, and the organization may still be held responsible for the risk if the party fails to manage it properly.

Option C (Control risk is minimized) is incorrect because control risk is not the final measure of risk. Control risk only reflects the effectiveness of the controls in reducing the likelihood and/or impact of a risk event. It is possible for a risk event to occur despite the presence of controls, or for the controls to be ineffective in reducing the risk to an acceptable level.

Option D (Inherent risk is minimized) is incorrect because inherent risk cannot be completely eliminated. It is determined by the nature of the asset, the threats it faces, and the vulnerabilities that could be exploited by those threats. However, inherent risk can be reduced through various measures such as implementing controls, reducing the asset's exposure, or diversifying the asset portfolio.