Final answer:
The term for the potential effect of an adverse event on objectives after controls have been applied is residual risk. Residual risk remains after all mitigation efforts and gives an organization a sense of the level of risk still present, which can then be assessed as either tolerable or intolerable.
Step-by-step explanation:
The term that describes the potential effect of an adverse event on objectives, after the application of controls to mitigate the adverse event, is b. residual risk. Residual risk is the risk that remains after all efforts to identify and mitigate risks have been applied. It's the exposure to uncertainty that an organization must understand and decide whether to accept it, transfer it, reduce it further, or avoid it.
To further explain, there are different types of risks that an organization may face. Inherent risk is the risk present before any controls are applied. Once controls are in place, we gauge the effectiveness of these controls by evaluating the residual risk. If the residual risk is within the organization's risk appetite, it may be considered tolerable risk. However, if it is above the acceptable threshold, it may be deemed as intolerable risk, which requires further action.