From en.wikipedia.org:
The RESIDUAL RISK is the amount of risk or danger associated with an action or
event remaining after natural or inherent risks have been reduced by risk
controls.[1]
The general formula to calculate residual risk is
<math> \text{residual risk} = (\text{inherent risk}) - (\text{impact of risk controls}) </math>
where the general concept of risk is (threats × vulnerability) or,
alternatively, (severity × probability).
An example of residual risk is given by the use of automotive seat-belts.
Installation and use of seat-belts reduces the overall severity and
probability of injury in an automotive accident;[2] however, probability of
injury remains when in use, _that is_, a remainder of residual risk.
In the economic context, residual means “the quantity left over at the end of
a process; a remainder”.
In the property rights model it is the shareholder that holds the residual
risk and therefore the residual profit.
** See also
- Risk analysis (business) < !-- was Risk analysis but this redirects to Risk management ; perhaps delete instead -->
- Risk management
** References
[reflist]
** External links
- Residual Risk Reduction (see https://web.archive.org/web/20160602084150/http://www.ohiocasualty-ins.com/omapps/ContentServer?c=cms_document&pagename=GoldenEagle%2Fcms_document%2FShowDoc&cid=1239994292235)
- Economist.com (see http://www.economist.com/research/Economics/alphabetic.cfm?LETTER=R#RESIDUAL%20RISK)
- Euronuclear.org (see http://www.euronuclear.org/info/encyclopedia/r/residual-risk.htm)
- R3i.org (see http://www.r3i.org/definition.php)
[Authority control]
Category:Risk