What is ISO 31000?
ISO 31000 is an international standard that provides principles and generic guidelines for managing risk. It applies to all industries and activities, including decision-making, project management, and daily operations.
Unlike certifiable ISO standards like ISO 9001 or ISO 27001, ISO 31000 is not certifiable for organizations. While organizations can align their systems with ISO 31000, they cannot be officially certified. However, individuals can earn certifications, such as becoming a Certified ISO 31000 Risk Manager, through formal training programs.
The 8 Principles of ISO 31000
- Integrated: Risk management is an integral part of all organizational activities.
- Structured and Comprehensive: A systematic approach yields consistent and comparable results.
- Customized: The framework and process are customized to the organization's context.
- Inclusive: Appropriate and timely involvement of stakeholders enables their knowledge and views to be considered.
- Dynamic: Risks can emerge, change, or disappear as an organization's external and internal context changes.
- Best Available Information: Inputs to risk management are based on historical and current information, as well as future expectations.
- Human and Cultural Factors: Human behavior and culture significantly influence all aspects of risk management.
- Continual Improvement: Risk management is improved through learning and experience.
Key Components of the ISO 31000 Framework
The framework assists in integrating risk management into significant activities and functions. The key components include:
- Leadership and Commitment: Top management must ensure that risk management is integrated into all organizational activities.
- Integration: Embedding risk management into the organization's structure and context.
- Design: Understanding the organization and its context, articulating risk management commitment, assigning roles, allocating resources, and establishing communication.
- Implementation: Implementing the risk management framework and process.
- Evaluation: Measuring framework performance against its purpose, implementation plan, and indicators.
- Improvement: Continually adapting and improving the framework.
ISO 31000 Risk Management Process
- Establishing the Context: Defining the internal and external parameters to be taken into account when managing risk, and setting the scope and risk criteria.
- Risk Assessment:
- Risk Identification: Finding, recognizing, and describing risks.
- Risk Analysis: Understanding the nature of risk and determining the level of risk.
- Risk Evaluation: Comparing the results of risk analysis with risk criteria to determine whether the risk and/or its magnitude is acceptable or tolerable.
- Risk Treatment: Selecting and implementing options for addressing risk (avoiding, taking, removing source, changing likelihood/consequences, sharing, or retaining).
- Monitoring and Review: Continual checking, supervising, critically observing, or determining the status in order to identify change from the performance level required or expected.
- Communication and Consultation: Continual and iterative processes that an organization conducts to provide, share or obtain information, and to engage in dialogue with stakeholders.
Benefits of Adopting ISO 31000
- Enhance Decision-Making: Informed choices based on a comprehensive understanding of risks and opportunities.
- Build Stakeholder Trust: Demonstrates good governance and responsible management.
- Operational Efficiency: Proactive management of risks minimizes disruptions and losses.
- Regulatory Compliance: Helps in meeting legal and regulatory requirements effectively.
- Competitive Advantage: Better resilience and agility in a changing business environment.
Implementation Checklist
- Gain Top Management Support: Ensure leadership commitment and resource allocation.
- Establish Framework: Define policy, objectives, mandate, and commitment.
- Identify Risks: Systematically identify risks across the organization.
- Analyze and Evaluate: Assess risks and prioritize them for treatment.
- Treat Risks: Develop and implement risk response plans.
- Monitor and Review: Regularly check the effectiveness of the framework and process.
- Report: Communicate risk management performance to stakeholders.
