In risk management, what does the term 'Residual Risk' imply?

The term "Residual Risk" refers to the level of risk that remains after all mitigation measures and controls have been put in place. These controls are designed to reduce the initial or inherent risk to an acceptable level. However, it’s important to recognize that no system or process can eliminate risk entirely; thus, there will always be some level of residual risk.

This concept underscores the idea that even with the best precautions and controls, uncertainties and potential hazards may still persist. It is crucial for organizations to identify and understand this residual risk, as it informs decision-making processes and helps in managing ongoing risk exposure effectively.

The other choices do not accurately define residual risk. For example, the risk that has been eliminated would signify that no risk remains, which contradicts the nature of residual risk. Initial risk refers to the risk present before any controls are applied, and perceived risk relates to individual perceptions rather than the actual level of risk remaining after controls are in place. Thus, understanding residual risk is essential for continuing risk assessment and management throughout ongoing operations.