What does residual risk mean in risk management?

Residual risk in risk management refers to the remaining risk that exists after all mitigation strategies and controls have been implemented. It represents the potential for loss or harm that cannot be entirely eliminated and must be acknowledged as part of the overall risk profile. Organizations must assess and monitor this risk to determine if it is acceptable or if further measures are needed to manage it effectively. Understanding residual risk is crucial for informed decision-making and resource allocation.