Risk Management and ISO 31000
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An overview of the ISO 31000 standard for risk management.
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Risk Management and ISO 31000
- 1. Risk Management and ISO 31000 Doug Newdick
- 7. ISO 31000 – An Overview Principles guide the creation of the framework The framework defines the process The performance of the process feeds back into the framework
- 8. ISO 31000 – An Overview: Principles
- 9. ISO 31000 – An Overview: Framework
- 10. ISO 31000 – An Overview: Process
Editor's Notes
- The principles govern risk management in an organisation. The framework integrates risk management throughout the entire organisation and ensures that information about risks is transparently available to all who need it for decision making. The risk management process shows how risks are managed for a particular scope.
- Mandate and commitment This component of the framework is about: gaining the commitment of management to the risk management framework; resourcing the effort; and assigning accountability and responsibility. Design of framework for managing risk Understanding the organisation and its context: understand the internal and external context of the organisation including: regulatory, economic, technology, market factors; organisational structure; strategies and policies; culture etc. Establishing risk management policy: state the objectives for risk management at the organisation including links to objectives and policies; how performance will be measured and reported; reviewing and improving the risk management framework. Accountability: identifying risk owners; identifying who is accountable for the framework. Integration into organisational processes: organisation wide plan to incorporate risk management in all processes. Resources: allocation of appropriate resources to risk management. Establishing internal communication and reporting mechanisms: establish internal reporting and communication mechanisms to support transparent management of risks including: communicating the framework; internal reporting on framework performance; consultation processes for internal stakeholders. Establishing external communication and reporting mechanisms: develop a plan as to how ti will communicate with external stakeholders including: engaging with external stakeholders; reporting to meet regulatory compliance; building confidence in the organisation and its approach to risk. Implementing Risk Management Implementing the framework for managing risk: implementation of the framework involves planning, training, communication and consultation. Implementing the risk management process: ensure that the risk management process is rolled out to all relevant parts of the organisation. Monitoring and review of the framework Risk management performance should be measured and reported, the framework should be periodically evaluated for appropriateness and effectiveness. Continual improvement of the framework Making decisions as to how to improve the framework based on the results of monitoring and evaluation.
- Communication and consultation Communication and consultation with all stakeholders (internal and external) should be ongoing throughout the risk management process. Communication plans should be developed early on in the process in order to ensure that all stakeholders understand what risks have been identified, the reasons for decisions made and why actions must be undertaken. Establishing the context This phase is aimed at understanding internal and external environment that the risk management activity takes place in. It involves understanding the objectives that the risk management process is supposed to address, and the internal and external factors that must be taken into account in the other phases. It involves understanding the internal and external context of the organisation, the context that the risk management process itself is operating in and the criteria that should be sued to evaluate risk. Risk assessment Risk assessment is the process of risk identification, analysis and evaluation. Risk identification: This is the process of identifying risks. The aim is to be comprehensive including as many risks as practical detailing their causes and potential consequences. Risk analysis: develop an understanding of the risks. Categorise it for evaluation and treatment including: likelihood, consequences, causes and sources. Risk evaluation: Decide which risks need treatment and their priority for treatment. Compare the level of risk found during the analysis phase against the risk criteria to determine to arrive at the need for (and level of) treatment. Risk treatment Risk treatment involves deciding which option to use to mitigate particular risks, and then the actual attempt to put that option into practice. Once a plan of action has been decided and started, risk treatment includes assessing whether the treatment is successful, assessing the amount of residual risk that remains, deciding whether that level of residual risk is acceptable, and if it isn’t bringing other treatment options into play. Monitoring and review Monitoring and review should be a continual part of the overall risk management process. Progress against plans should be monitored and courses of action should be reviewed for effectiveness and adjusted if they are not effective.