What does a risk officer analyze to identify the risk that still exists after control activities have been implemented?

The role of a risk officer involves assessing various types of risks to determine the effectiveness of control activities put in place to mitigate those risks. Residual risk is the term used to describe the risk that remains after these control activities have been implemented. It reflects the possibility of loss still existing despite the measures taken to protect against that loss.

Understanding residual risk is crucial for organizations as it helps them evaluate their overall risk exposure and the adequacy of their risk management strategies. This ongoing analysis ensures that businesses are aware of any potential vulnerabilities even after controls are in place, allowing for more informed decision-making and adjustments to risk management approaches as necessary.

In contrast, inherent risk refers to the level of risk that exists in the absence of any controls. Operational risk pertains to risks arising from everyday business operations, while strategic risk involves risks that could impact an organization's overall strategy and objectives. These concepts are important in their own right but do not specifically relate to the analysis of risk that remains following the implementation of control measures.