Which of the following results from the risk assessment process would BEST assist risk management decision making?
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A. B. C. D.D.
Residual risk provides management with sufficient information to decide to the level of risk that an organization is willing to accept.
Control risk is the risk that a control may not succeed in preventing an undesirable event.
Risk exposure is the likelihood of an undesirable event occurring.
Inherent risk is an important factor to be considered during the risk assessment.
The risk assessment process is an important component of a comprehensive risk management program. It involves identifying, analyzing, and evaluating risks to determine their potential impact on an organization's goals and objectives. The results of the risk assessment process can be used to make informed risk management decisions that prioritize resources and address the most critical risks first.
Out of the options provided, the best result from the risk assessment process to assist in risk management decision making is D. Residual risk.
Residual risk refers to the level of risk that remains after controls have been implemented. It is calculated by subtracting the effectiveness of controls from the inherent risk. In other words, it represents the level of risk that the organization is willing to accept after implementing controls to mitigate the inherent risk.
Residual risk is an important metric for risk management decision making because it provides a clear indication of the effectiveness of the controls that have been implemented. By analyzing the residual risk, decision-makers can identify areas where controls may need to be strengthened or additional controls may need to be implemented to further reduce the risk to an acceptable level.
Control risk refers to the risk that remains after controls have been implemented. While this is similar to residual risk, control risk does not take into account the inherent risk or the effectiveness of the controls that have been implemented. As a result, control risk is not as useful for decision making as residual risk.
Inherent risk refers to the level of risk that exists before any controls are implemented. While this is important information, it does not provide insight into the effectiveness of controls or the level of risk that the organization is willing to accept.
Risk exposure refers to the potential financial or other losses that could result from a risk event. While this is important information, it does not provide insight into the effectiveness of controls or the level of risk that the organization is willing to accept.
In summary, the best result from the risk assessment process to assist in risk management decision making is D. Residual risk because it provides a clear indication of the effectiveness of controls that have been implemented and identifies areas where controls may need to be strengthened or additional controls may need to be implemented to further reduce risk to an acceptable level.