Which of The following best describes a risk that is deemed "unacceptable" to the organization?

The correct answer is D. A risk where residual risk exceeds the tolerance level. A risk that is deemed "unacceptable" to the organization is one where the residual risk (the remaining risk after controls are applied) exceeds the organization's risk tolerance level. This means that despite controls in place, the level of risk remains higher than what the…

Managing the Internal Audit Activity

Question

Options

AA risk where likelihood and impact are high
BA risk where inherent risk exceeds its residual risk
CA risk where inherent risk exceeds the tolerance level
DA risk where residual risk exceeds the tolerance level

How the community answered

(20 responses)

C
5% (1)
D
95% (19)

Explanation

A risk that is deemed "unacceptable" to the organization is one where the residual risk (the remaining risk after controls are applied) exceeds the organization's risk tolerance level. This means that despite controls in place, the level of risk remains higher than what the organization is willing to accept. Identifying such risks is critical for ensuring appropriate management action to mitigate them further.

Topics

#residual risk#risk tolerance#inherent risk#risk acceptability

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