Which of the following best describes this type of risk?

A snow removal company is conducting a scenario planning exercise where participating employees consider the potential impacts of a significant reduction in annual snowfall for the coming winter.

Which of the following best describes this type of risk?
A . Residual.
B . Net.
C . Inherent.
D . Accepted.

View Answer

Answer: C

Explanation:

Inherent risk is the exposure to loss in an organization that arises from the nature of its activities without taking into account any actions the organization takes to alter that risk level. A scenario planning exercise that considers a significant reduction in annual snowfall addresses inherent risk, as it relates to potential impacts that naturally arise from changes in weather patterns, which are intrinsic to the business of a snow removal company.

Reference: Risk management terminology and frameworks.