Benefits of ISO 31000
ISO 31000 is a standard for risk management.
- Giving you a competitive advantage
- Increasing employee awareness of organizational risks
- Reduce the frequency of, and ultimately eliminate risks
- Improve trust of stakeholders
- Foster forward-thinking mentalities
- Improve company culture
- Improve success rate
ISO 31000 framework and guidelines
The risk management framework is made up of six distinct areas:
Leadership. Leaders need to take the initiative to make sure that ISO 31000 is adopted and applied
Integration. While it is important to integrate risk mitigation into as many organizational processes, it is important to not cause operational bottlenecks or stand in the way of core business processes being performed.
Design. Organizations will need to design a risk management strategy that works for the organization based on its needs.
Implementation. The implementation process integrates the organization’s risk management design into business processes. Implementation is usually a formal process with stated objectives, deadlines and reporting requirements.
Evaluation. Evaluation assesses the design to determine what is working and what may need to be refined.
Improvement. Organizations should continuously look for ways to improve their ISO 31000 implementation.
ISO 31000’s risk management principles
ISO 31000 seeks to help organizations take a methodical approach to risk management by doing three key things:
- identify risks;
- evaluate the probability of an event tied to an identified risk occurring; and
- determine the severity of the problems caused by the event occurring.
As such, ISO 31000 does not seek to eliminate risks, because the total removal of all risks is impossible. Instead, it is meant to help organizations identify their risks and establish a strategy for mitigating or reducing risks where appropriate.
There are eight core principles involved in ISO 31000:
- For efforts to be successful, all the organization’s key stakeholders must be involved.
- Organizations change over time. As such, the risk sources that are relevant to an organization today might change tomorrow. Organizations must perform ongoing risk analysis if their risk mitigation efforts are to continue to work.
- Best available information.Risk mitigation efforts must be based on the best and most current information available. However, organizations must also accept the idea that unanticipated risks will always exist.
- Human and cultural factors.Human and cultural factors can be key drivers of risks. The list of identified risk should include those risks related to human error or to the organization’s unique culture.
- Continuous improvement.Long-term adherence to ISO 31000 means adopting the principles of continuous improvement to ensure that the organization’s risk mitigation efforts improve over time.
- The concepts of risk mitigation and identification should be integrated into all business processes.
- Structured and comprehensive.Organizations should create a comprehensive risk mitigation strategy that addresses all known risks.
- Because every organization is unique, the concepts of ISO 31000 should be applied in a way that is custom tailored to the organization.