Which of the following situations would BEST justify escalation to senior management?

Residual risk exceeding acceptable limits signifies that the remaining risk, even after controls are applied, is greater than what the organization is prepared to tolerate or absorb. This situation fundamentally challenges the organization's risk appetite and requires senior management's attention and decision-making for further mitigation strategies, risk acceptance, or resource allocation.

Inadequately recorded residual risk is an operational issue that should be corrected, but it doesn't necessarily indicate an immediate threat level requiring senior management intervention as much as exceeding acceptable limits does.

Residual risk remaining after controls have been applied is a normal and expected outcome of risk management; it doesn't automatically necessitate escalation unless it exceeds acceptable limits.

Residual risk equaling current risk implies that no controls have been applied or that controls have been entirely ineffective, which, while a problem, the critical trigger for escalation is when that remaining risk is *unacceptable*.