Use a peeler to remove the outer skin of the horseradish root. Use a fine grater to grate the root into shreds.
In a medium bowl, whisk together sour cream, horseradish, water, mayonnaise, mustard, vinegar, lemon juice, honey, chives (if using), salt, and pepper. Season to taste with more salt and pepper. Add more horseradish root if desired for a spicier taste. Add more water, 1 tablespoon at a time for a thinner sauce.
Cover and refrigerate if not using right away, or up to 7 days.
Recipe Yield: About 1 cup
Serving Size: 1 tablespoon
Storing: Store in an airtight container in the refrigerator for up to 7 days.
Using Prepared Horseradish: Substitute 1/2 cup of the prepared horseradish for the freshly grated horseradish. Add more to taste for a stronger taste. Add distilled vinegar 1 teaspoon at a time to adjust the tanginess level.