Managing risk effectively is essential to ensure businesses succeed and thrive in an environment of constant uncertainty. ISO 31000 aims to simplify risk management into a set of clearly understandable and actionable guidelines, that should be straightforward to implement, regardless of the size, nature, or location of a business. However without leadership, your risk management strategy is likely to fail. As good leadership has a tremendous importance in the success of the ISO 31000 risk management system. Here are a few key points that top management should pay close attention to for a successful ISO 31000 risk management system.
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ISO 31000 is not one-size-fits-all
ISO 31000 clearly states that risk management is an open-ended process designed to be highly customized and tailored to the individual needs and contexts of the organisation implementing it. That said, ISO 31000 advises particular attention to the customisation of the risk profile, risk appetite, and the communication and facilitation of risk management throughout the company culture.
Executive alignment is crucial
This is one of the most important points; top management must be firmly committed to the risk management program, else the system will not work. Executives should make sure that the entire risk management process is integrated across all levels and departments of the organisation, as well as being strongly aligned with company objectives, strategy, and culture.
Consider how risks will impact value
Top management should be responsible for making sure that risks are prioritised in accordance with how they impact the organisation’s ability to create and deliver value. This kind of approach differs from traditional risk management approaches, which would typically rank the risks by numeric value, assigned by considering probability and estimated severity.
Proactive, not reactive
This one is self-explanatory. The basic idea is that risk management should be preemptive, in that it prepares for risks that haven’t yet arisen, rather than simply reacting to the risks that are currently identifiable.
What about ISO 31000 certification?
ISO 31000 provides guidelines, not requirements, and is therefore not intended for certification purposes. It’s important to note that ISO 31000 is a set of guidelines, not requirements. Many ISO standards, like ISO 37001 ANTI-BRIBERY MANAGEMENT SYSTEMS, and ISO 19600 COMPLIANCE MANAGEMENT SYSTEMS, are requirements, which means they compose a strict set of specifications that can be certified to. ISO 31000 is not like that; it can’t be certified to. It’s simply a set of best practice guidelines.
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Getting Started with ISO 31000 Risk Management?
ISO 31000 is an international standard issued in 2009 by ISO (International Organization for Standardization). All types and sizes of organisations face internal and external factors that directly impact whether an organisation can achieve their objectives or not. ISO 31000:2018 serves as a guide for the design, implementation and maintenance of risk management, ISO 31000:2018 describes a systematic and logical process, during which organisations manage risk by identifying it, analysing it, and then make a determination as to mitigating the risk treatment in a way that is consistent with their risk appetite. An organisation can implement risk management across the entire company, and it can do so at any time. It can also tailor these controls to specific areas and activities in the business.
- Can be used by organisations to compare their risk management practices with an internationally recognised benchmark, providing sound principles for effective management and corporate governance.
- Is a clear indicator to your customers, and other stakeholders that as an organisation, you are committed to managing risks in every part of your business
- Increases public confidence in the organisation as it demonstrates your management capabilities in protecting your business from internal and external threats.
- ISO 31000:2018 helps to provide guidance for internal or external audit programmers.
- In competitive bidding for commercial tenders, it will enhance your company’s reputation and give you a competitive advantage.
Our newly published “ISO 31000 Risk Management: A guide to identify, analyse and mitigate risk” playbook covers everything you need to know about ISO 31000:2018; here’s a quick rundown of the playbook structure:
- What is ISO 31000?
- Why is this Standard a good idea?
- What are the benefits for my business?
- Principles of ISO 31000:2018
- ISO 31000 framework
- Why was it revised?
- What are the main differences?
- Key Clauses of 31000:2018
- Who is the standard for?
- The process
- The link between 31000:20180 and other standards
- Importance of risk management leadership
- 31000:2018 and continuous improvement
- How do we get started?
Risk management is a full-time, ongoing endeavour for organisations in today’s business world, and it poses constant challenges. The first part of reducing risk is having a strategy, and taking action. So DOWNLOAD your free playbook now!