Residual risk is the likelihood of risk ____.

Residual risk refers to the level of risk that remains after a credit union has implemented controls or mitigative measures to reduce those risks. When organizations assess various risks, they typically put in place policies, procedures, and other controls to minimize those risks as much as possible. However, it is essential to recognize that no control mechanism is infallible, and some level of risk is often unavoidable. This leftover risk is termed residual risk.

Understanding this concept is critical for internal auditors as it helps them evaluate the effectiveness of the organization's risk management strategies and decide how to address the remaining risks. By identifying and managing residual risks, credit unions can better safeguard their assets and ensure compliance with regulatory frameworks.

The other options suggest misunderstandings of risk management terminology or processes. For instance, suggesting that residual risk involves increasing risk or completely eliminating it misrepresents the essence of risk management, which focuses on mitigation rather than eradication. Additionally, the idea of reevaluating previously assessed risks does not directly define residual risk but rather relates to the ongoing process of risk management and monitoring.