Definition

inherent risk

Contributor(s): Francesca Sales

Inherent risk is a category of threat that arises from the organization's human activity or physical environment. 

There are four basic ways of dealing with risk: reduce it, avoid it, accept it or transfer it. Inherent risk, which addresses the possibility that some human mistake or natural event will adversely affect an organization's assets, cannot be avoided or transferred away. If controls are not introduced to reduce inherent risk, it must be accepted. 

See also: pure risk, systemic risk, speculative risk, residual risk

This was last updated in May 2014

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