What distinguishes inherent risk from residual risk?

Inherent risk represents the level of risk that exists in a situation before any controls or mitigations are applied. It is a fundamental characteristic of an environment, process, or asset that makes it susceptible to threats or vulnerabilities. This means that inherent risk is evaluated based only on the nature of the threats and the vulnerabilities present, without considering any measures that have been implemented to reduce that risk.

On the other hand, residual risk refers to the amount of risk that remains after controls, measures, or treatments are applied to mitigate the inherent risk. Residual risk is what the organization ultimately faces and needs to manage after efforts have been made to reduce the initial risk. Thus, the distinction between inherent and residual risk is crucial for effective risk management because it helps organizations understand the effectiveness of their controls and the risk landscape they operate within.

Recognizing this difference allows businesses and security professionals to prioritize their risk management efforts and allocate resources more effectively.