 Inherent Risk: Inherent risk refers to the exposure to risk in its natural state, without considering any

controls or mitigation measures. It is the risk that exists before any action is taken to manage it.

Example: In the scenario of a snow removal company, the significant reduction in annual snowfall

represents an inherent risk as it is a natural condition that affects the company's operations.

 Other Risk Types:

Residual Risk: This is the risk that remains after controls and mitigation strategies have been applied.

Net Risk: Similar to residual risk, it is the risk that remains after considering existing controls.

Accepted Risk: This is the risk that the organization knowingly accepts after evaluating its impact and

likelihood.

 Scenario Planning: The exercise of considering the impacts of reduced snowfall helps the company

understand its inherent risks and prepare for potential adverse outcomes.