An internal auditor is assessing the organization's risk management framework. Which of the following formulas should he use to calculate the residual risk? A. B. C. D.

The correct answer is C. (Probability of events) x (Impacts). The appropriate formula to calculate residual risk is (Probability of events) ?(Impacts). Residual risk is the risk that remains after controls are implemented to mitigate the inherent risk. It reflects the remaining exposure after considering the effectiveness of existing…

Managing the Internal Audit Activity

Question

Options

A(Probability of events) x (Control) x (Asset value)
B(Probability of events) x (Impacts) x (Controls gap)
C(Probability of events) x (Impacts)
D(Probability of events) x (Asset value) x (Vulnerability) x (Controls)

How the community answered

(25 responses)

A
16% (4)
B
4% (1)
C
76% (19)
D
4% (1)

Explanation

The appropriate formula to calculate residual risk is (Probability of events) ?(Impacts). Residual risk is the risk that remains after controls are implemented to mitigate the inherent risk. It reflects the remaining exposure after considering the effectiveness of existing controls. This formula takes into account the likelihood of an event occurring and the potential impact if it does occur.

Topics

#residual risk#risk calculation#risk management framework#inherent risk

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