Certification in Risk Management Assurance (CRMA) 2025 – 400 Free Practice Questions to Pass the Exam

Inherent risk refers to the level of risk that exists in the absence of any controls or mitigation strategies. It represents the natural exposure to risk that an organization faces due to its operations, environment, or external factors before any measures are taken to manage or reduce that risk. This concept is crucial in risk management and auditing, as it helps organizations understand what risks are present inherently and how significant those risks are before any controls are implemented. Identifying inherent risk allows organizations to prioritize risks, allocate resources effectively, and develop tailored controls to manage those risks appropriately.

Understanding inherent risk is essential for evaluating the overall risk landscape and determining how much control and oversight are required to meet the organization's risk tolerance. It lays the groundwork for assessing residual risk, which is the risk that remains after controls are in place.