Risk is present in every aspect of our life, from mundane everyday activities such as choosing a route to work, to complex corporate decisions such as opening a manufacturing plant in a different country. Much effort was put over the past decades to better understand risk and its nature, which led to the creation of methodologies and approaches that enable individuals and organizations to make accurate decisions based on logical reasoning.
One of the most distinguished frameworks to address risk is provided by ISO 31000, an international standard that incorporates principles, proven practices, and guidelines on managing risks faced by organizations. What is ISO 31000?
ISO 31000 is an international standard that provides guidelines on managing any type of risk in any business activity. The standard provides guidelines on principles, risk management framework, and application of the risk management process.
ISO 31000 is applicable to organizations of all types and sizes who seek to integrate risk management into business functions. It covers the risk management principles which are the foundation for managing risk, and guides organizations in developing a risk management framework by:
Integrating risk management into organizational structures
Designing a framework for managing risk that fits the organization’s context
Implementing the risk management framework
Evaluating the effectiveness and continually improve the suitability and adequacy of the risk management framework
Demonstrating leadership and commitment (top management)
ISO 31000 considers the risk management process as an integral part of overall management and decision-making. The risk management process can be applied on a strategic level and organization-wide, but it can also be applied on projects, products, and processes. ISO 31000 provides guidelines on risk communication and consultation, defining of the scope, context, and criteria, risk assessment, risk treatment, monitoring and review, and lastly, recording and reporting of risks.
