CISI Risk In Financial Services Practice Questions - CISI Risk In Financial Services (IOC Technical Unit) Exam

Which statement best distinguishes inherent risk from residual risk?

Inherent risk is the risk after controls; residual risk is before controls Inherent risk is the risk before any controls; residual risk is what remains after controls are applied Both terms describe the same level of risk Residual risk only applies to operational risk

Correct Answer:

Inherent risk is the risk before any controls; residual risk is what remains after controls are applied

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