Lesson: Residual Risk

In this lesson, delve into the world of business risks with Nick Palazzolo, CPA, as he explores the concept of residual risk—one of the many types of risks that businesses must confront. Nick breaks down residual risk, highlighting it as what remains after management's efforts to mitigate it are applied. Besides discussing inherent risk, which exists independently of any action by management, he also walks through a memorable formula that helps illustrate how residual risk is calculated. By the end of the lesson, Nick ensures that a clear understanding is established of both the concept of inherent risk and how to figure out the level of residual risk after management intervention.