The residual risk is the risk or danger of an action or an event, a method or a (technical) process that, although being abreast with science, still conceives these dangers, even if all theoretically possible safety measures would be applied (scientifically conceivable measures).
The formula to calculate residual risk is (inherent risk) x (control risk) where inherent risk is (threats × vulnerability).
In the economic context, residual means “the quantity left over at the end of a process; a remainder” (dictionary.com).
In the property rights model it is the shareholder that holds the residual risk and therefore the residual profit.
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Famous quotes containing the words residual and/or risk:
“The volatile truth of our words should continually betray the inadequacy of the residual statement. Their truth is instantly translated; its literal monument alone remains.”
—Henry David Thoreau (1817–1862)
“If you love the good thing vitally, enough to give up for it all that one must give up, then you must hate the cheap thing just as hard. I tell you, there is such a thing as creative hate! A contempt that drives you through fire, makes you risk everything and lose everything, makes you a long sight better than you ever knew you could be.”
—Willa Cather (1873–1947)