Which type of audit risk is known as the risk that occurs in the management system despite the internal control mechanisms in an organization?

The correct answer is inherent risk. In the context of auditing, inherent risk refers to the possibility of a material misstatement occurring in the management system due to factors that are inherent to the organization or its environment. This risk exists irrespective of the effectiveness of internal controls. In other words, inherent risk is the baseline level of risk that is present before any considerations of internal controls are applied.

For example, certain industries may have higher inherent risks due to the nature of their operations, regulatory environments, or the complexity of their processes. Because these risks are tied to the characteristics of the organization itself, they can persist even when internal controls are in place and functioning well.

Control risk, on the other hand, pertains to the risk that a material misstatement would not be prevented or detected on a timely basis by the internal controls in place. Detection risk involves the possibility that an auditor may not detect a material misstatement reflecting the auditor's substantive testing and procedures.

Mitigation risk is less commonly referenced in the context of audit risk and does not have a specific definition within established auditing standards. Thus, the definition and implications surrounding inherent risk make it the most appropriate choice in this scenario.