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It is impossible for any business to convince itself it doesn’t face some kind of cyber-attack risk, considering the threat ecosystem is nowadays so broad and growing each and every day. Cyberattacks have been happening for decades, but as we have become more dependent on digital technology and infrastructure and therefore create more value in digital assets, we are allowing the potential for harm resulting from a cyberattack to grow significantly. The attackers are developing new and better attack tools constantly, therefore, new software vulnerabilities or zero-day vulnerabilities can be exploited in order to gain access to systems that are discovered. Cyber-harm is not always tangible to non-experts, and it can be hard to know whether action needs to be taken in order to address a threat that has not yet struck. In this day and age being cyber-secure means to be accepting insecurity, but also attempting to manage it so you can remain resilient, and not suffer devastating losses. This makes residual risk an issue that needs to be better understood and addressed.

What is Residual Risk?

Residual risk is defined as the risk remaining after all the controls are accounted for and your organization has taken proper precautions. In other words, we can think of residual risk as something that can affect your business even if you’ve taken all the precautions.

The ISO 27001 regulations are the handbook that allows organizations to manage the security of assets that are entrusted to an organization by a third party, in order to be compliant with ISO 27001, the companies must have residual security checks in place.


ISO/IEC 27001 is widely known, providing requirements for an information security management system (ISMS), though there are more than a dozen standards in the ISO/IEC 27000 family. Using them enables organizations of any kind to manage the security of assets such as financial information, intellectual property, employee details, or information entrusted by third parties.

In order to better understand what residual risk is and how it can impact us, we need to take a look at the formula used for calculating it.

Residual risk = Inherent Risk – Risk Control

Inherent Risk is the risk that exists in mitigation factors that are not in place, also referred to as the risk before controls or the gross risk, being the full amount of risks that exists in the absence of controls.

Risk controls are any countermeasures, that the company has implemented in order to better manage the risks.

The importance of residual risk 

It’s important to understand how vital is the residual risk from a compliance standpoint with organizations being allowed to manage the security of assets that are entrusted to an organization by third parties.

Companies need to have residual security checks put in place meant to sustain the inherent security checks already existing.

It’s important for the security teams to start focusing on this type of risk as well, given the fact that usually, the main focus is related to the inherent risks, therefore making sure that they are on the right path when it comes to security.

Even if you make sure that you’ve put into place every security measure possible, you still need to be paying close attention to the processes taking place.

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Only by careful monitoring and understanding of the residual risk, as well as inherent risk, the security professionals will be able to identify potential security threats more quickly and accurately, and also be able to better understand how those threats can negatively impact a company’s data.

Managing residual risk

Once you understand the residual risk concept, you will be able to classify the risk, so that your organization knows the best way to respond in case of a threat.

You can manage residual risk by following one of these strategies:

Avoid the Risk

If management is not prepared to consider the residual risk or willing to invest more money to lower the amount of risk it could decide to take offline the data in order to eliminate any cybersecurity possible risks.

Risk Reduction

If the residual risk is unacceptable other potential mitigating risk-reduction steps will be taken into account, meaning that the team will search for new measures like purchasing a more advanced and powerful firewall, adding data tracking tools, or implementing more complicated multiple-factor authentication schemes.

Risk Transfer

This technique is referring to incorporating the idea of insurance into the residual risk cybersecurity, thus helping the organization to avoid choosing one of the other alternatives by sharing responsibility with an acceptable strategy.

Risk Acceptance

Sometimes the management will decide that the best course of action can be to accept the risk, in which case, proper steps must be taken that the responsibility for doing so is straightforward.

Wrapping up

If the residual risk is below an acceptable level of risk, your organization doesn’t need to do anything more than to accept it, but if the tolerance to this specific risk is not quite high inside your company, the security team will have to find better ways to mitigate the risks, by reassessing your residual risk, by constant monitoring and calculating the risk levels and tolerance as organizations.

Author Profile

Dora Tudor

Cyber Security Enthusiast

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Dora is a digital marketing specialist within Heimdal™ Security. She is a content creator at heart - always curious about technology and passionate about finding out everything there is to know about cybersecurity.

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