Risk Management and ISO 31000

Everything You Need to Know

ISO 31000 is a 2009 international standard issued by ISO (International Organization for Standardization) that is intended to serve as a guide for the design, implementation, and maintenance of risk management. Organizations of all sizes face internal and external factors and influences that make it uncertain whether or not they will achieve their goals. The effect of uncertainty on an organization's objectives is risk. Any organization's activity involves risk. ISO 31000:2009 describes a systematic and logical process by which organizations manage risk by identifying it, analyzing it, and then determining whether the risk should be modified by risk treatment in order to meet their risk criteria.

Structure of ISO 31000:2009

ISO 31000 is divided into the following clauses:

• Principles of risk management: There are 11 risk management Principles that the organization should follow to have an effective risk management:

• Risk management creates and protects value;
•  An integral part of all organizational processes;
•  Part of decision making;
• Explicitly addresses uncertainty;
• Systematic, structured and timely;
• Based on the best available information;
•  Tailored;
•  Takes human and cultural factors into account;
•  Transparent and inclusive;
•  Dynamic, iterative and responsive to change;
•  Facilitates continual improvement of the organization.

• Framework: Assists in the effective management of risks through the application of the risk management process; ensures that risk information derived from the risk management process is adequately reported; and ensures that this information is used as a basis for decision making and accountability at all relevant organizational levels. This clause describes the framework for risk management's necessary components and how they interrelate in an iterative manner.
• Process: According to ISO 31000, the effectiveness of management determines the success of risk management. The risk management process should be: 

• An integral part of management; 
• Embedded in the culture and practices;
• Tailored to the organization's business processes.

The advantages of risk management for business

Risk management enables an organization to ensure that it is aware of and comprehends the risks that it faces. Adopting an effective risk management process within an organization will provide benefits in a variety of areas, some of which are as follows:

• increased likelihood of achieving goals
• proactive management was encouraged
• Throughout the organization, there is an understanding of the importance of identifying and treating risk.
• improved spotting of opportunities and threats
• Compliance with applicable legal and regulatory requirements, as well as international standards
• Mandatory and voluntary reporting has been improved.

If you want to attain all of the above benefits, you can join our ISO 31000 training courses