5. Inherent risk and residual risk:

A. Explain the difference between inherent risk and residual risk (4 points).

B. One of CSK Inc.s corporate objectives is to maintain a quality workforce. Management has identified one specific risk as:

The companys workforce is getting older. Senior management fears that the rate of employee turnover will increase dramatically over the next decade. (Note: the companys staffing levels have been relatively stable for many years and the current average age is 51.)

List three risk response choices CSK could take to manage this specific risk. For each response choice, briefly describe how it applies to this specific situation (9 points).