(also remaining risk, net risk)
Residual risk definition
Residual risk refers to the remaining threat to an information system after security controls and mitigation strategies have been set. It represents potential cyber harm that persists despite countermeasures, pointing to unaddressed vulnerabilities and ever-evolving threats.
Organizations implement security protocols, conduct regular cybersecurity assessments, and leverage advanced technology to minimize inherent risks. Yet despite proactive measures, total risk elimination is impossible because of the dynamic nature of cyber threats and the limitations of control measures. Residual risk highlights persistent dangers, signaling areas that may cause security breaches if left unaddressed.
Understanding residual risk is vital for effective cybersecurity management, helping organizations identify persisting vulnerabilities, efficiently allocate resources, and determine an acceptable risk level aligning with business goals and risk appetite.
Inherent risk vs. residual risk
Inherent risk: This type of risk exists before implementing any controls or strategies. Factors such as system complexity, data sensitivity, and the nature of the online environment in which an organization operates influence inherent risks. For example, a company storing large volumes of sensitive customer data inherently faces a high risk of data breaches.
Managing residual risk
- Identify all the risks faced by the organization.
- Assess the likelihood and impact of each risk.
- Implement risk reduction measures to minimize the probability and effect of each risk.
- Continuously monitor the effectiveness of the risk reduction measures and adjust as necessary.
- Regularly review the risk management process to ensure its effectiveness.