Residual loss, as an agency cost, refers to:

		the costs incurred by the agent when implementing assurances that they are acting in the principals best interests.
		the costs incurred by the principal in observing, evaluating and controlling the agents behaviour.
		the amount by which the marginal cost is less than the expected benefit of additional monitoring and bonding.
		the amount by which the marginal cost exceeds the expected benefit of additional monitoring and bonding.