What is ISO 31000 in Risk Management?
Risk management is crucial for any organisation. A well-developed risk management strategy will help you:
- Respond to incidents.
- Mitigate potential hazards and threats.
- Operate with certainty.
- Improve stakeholder confidence.
ISO 31000 allows you to customise your approach to risk management to suit your organisation’s operational needs. By following the principles, framework and processes outlined in ISO 31000, you’ll better identify, assess and respond to potential risks.
While ISO 31000 is not certifiable like other ISO Standards, it is a valuable resource and framework for organisations committed to proactive risk management.
Understanding ISO 31000
ISO 31000 was first issued in 2009 by the International Organization for Standardization. The most recent version is ISO 31000:2018.
This streamlined version covers the most up-to-date principles. There is also a higher emphasis on leadership, particularly from senior management, and integrating the guidelines to create a risk management culture.
The focus on leadership and integration aims to call attention to risk management as an important part of business operations. A strong risk management culture helps improve business planning and decision-making. By being proactive and involving all business areas, you’ll be better equipped to address emerging risks.
Regardless of industry, risk management is crucial to operating a business. ISO 31000:2018 was reviewed and updated to make risk management Standards more accessible for everyone. The updated Standard adopts simpler language and applies to a range of industries. Its framework can be tailored to suit individual businesses’ needs, while still meeting good practice guidelines.
The aim of ISO 31000 is to keep risk management simple. The latest edition offers concise, clear guidelines to establish a baseline. From there, you can develop your risk management strategies.
What is the ISO 31000 Framework?
There are 3 key components to ISO 31000: principles, framework and process.
The principles outlined in ISO 31000 establish the core characteristics of good risk management. According to ISO 31000 principles, risk management must be:
- Integrated
- Structured
- Customised
- Inclusive
- Dynamic
- Best available information
- Human and cultural factors
- Continually improved.
The ISO 31000 framework lays the foundation for successfully implementing risk management across your organisation. It provides a ‘framework’ to help you integrate risk management into your systems, strategies and workplace culture.
And finally, the process provides an outline or guide to identifying, managing and evaluating risks. This involves consultation with relevant stakeholders, as well as defining the scope and purpose of risk management within your organisation.
The Importance of the ISO 31000 Risk Management Process
The ISO 31000 risk management process is the application of its principles and framework. It’s an iterative process that involves continuous consultation, monitoring and reporting to adapt to changing risk landscapes.
The process begins by establishing the scope, context and criteria of your risk management strategies. It involves identifying and evaluating risks against a matrix, and establishing risk treatments to mitigate or eliminate the risk.
As new risks emerge, due to technological or legislative changes, your risk management processes need to be reviewed and updated. Dynamic risk management is a key principle of ISO 31000. We must adapt as new information becomes available to ensure we continue to proactively manage risk.
Key Benefits of ISO 31000 for Risk Management
Having ISO 31000 in place helps organisations identify, assess and mitigate risks. Good risk management can protect the business’s reputation and assets and helps minimise disruptions to core operations.
ISO 31000 provides an internationally recognised risk management Standard that businesses can implement. It provides businesses with a framework for good practices.
These practices improve transparency and accountability by involving all business areas, including senior management. This helps:
- Create a good risk management culture.
- Improve trust and credibility with stakeholders.
- Reduce uncertainty by taking a proactive approach to risks.
- Mitigate or eliminate severe outcomes.
ISO 31000 helps you be proactive and respond to risks before they happen. Integrating the ISO 31000 risk management process into planning and decision-making ensures risks are identified and you’ll be prepared to respond if an incident occurs.
ISO 31000 vs Other Risk Management Standards
ISO 31000 provides a universal framework tailored to an organisation’s needs and makes risk management accessible to everyone.
It is an internationally recognised Standard, which is more important than ever in our globalised marketplace. ISO 31000 ensures a consistent approach to risk management that can be applied across all industries and regions.
ISO 31000 highlights the importance of leadership and integration to create a good risk management culture, reduce uncertainty and improve trust. Having an internationally recognised Standard provides peace of mind for your stakeholders.
While industry Standards can provide a good framework, they are limited in their scope. ISO 31000 is the ‘one size fits all’ approach to risk management. It is broadly applicable across industries and can be adapted to an organisation’s needs, as well as the continuously evolving risk landscape.
How Can Risk Managers Use ISO 31000 Effectively?
Risk managers can integrate risk management into their broader organisational processes by implementing the principles, framework and processes outlined in ISO 31000.
To effectively implement ISO 31000, you should:
Customise the framework
ISO 31000 can be adapted to suit an organisation’s objectives and operational needs. Risk managers should establish a scope to inform how ISO 31000 is applied in their organisations. Consider current risk management culture, company size and industry.
Engage with stakeholders
ISO 31000 has a focus on leadership and integrating risk management at all levels of decision-making processes. Risk management should be collaborative and involve consultation with stakeholders. This should include senior management and may also include other departments such as HR/People & Culture, IT, Operations and others.
Monitor, review and report regularly
Once you’ve established processes for risk management, these should be monitored and reviewed regularly. This ensures all processes are kept up-to-date and can be adapted to address emerging risks. To improve transparency and improve risk management culture, updates should be shared with relevant stakeholders – whether this is a formal report, updates at meetings or via communication channels.
By adapting the ISO 31000 framework and integrating it with your business objectives, you will create a comprehensive, Standardised approach to risk management.
Conclusion: Embracing ISO 31000 for Effective Risk Management
Implementing ISO 31000 is a great step towards better risk management.
It provides the framework to help your organisation identify, assess and mitigate risks while creating a positive risk management culture.
The framework is designed to be relevant, accessible and adaptable. Meaning it can be applied and tailored to suit businesses of all sizes, across all industries. By implementing ISO 31000, you can better prepare for potential risks and foster long-term strategic success.