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  • Exam Code: IIA-CIA-Part1
  • Exam Name: Essentials of Internal Auditing
  • Version: V12.75     Q & A: 69 Questions and Answers

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When residual risk is minimized:
A. risk is transferable.
B. control risk is reduced.
C. transferred risk is acceptable.
D. acceptable risk is probable.
Answer: D
Since residual risk is the risk that remains after putting into place an effective risk management program, it is probable that the organization will decide that it is an acceptable risk if sufficiently minimized. Transferred risk is risk that has been assumed by a third party, therefore its magnitude is not relevant. Accordingly, choices B and D are incorrect since transferred risk does not necessarily indicate whether risk is at an acceptable level.
Minimizing residual risk will not reduce control risk.


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