What are residual risks?

Residual risks refer to those risks that persist even after strategies have been employed to manage or mitigate them. When an organization identifies potential risks within a project or process, it typically implements various response strategies, such as risk avoidance, transfer, reduction, or acceptance. However, no strategy can completely eliminate all risks. As a result, the risks that remain, despite these efforts, are categorized as residual risks.

Understanding residual risks is crucial for effective risk management, as it encourages organizations to continuously monitor and assess the effectiveness of their strategies and to be prepared for any potential issues that may arise from these remaining risks. Properly addressing residual risks ensures that an organization is not caught off guard by unforeseen circumstances, maintaining a proactive stance in its risk management efforts.