The most important worldwide standard for risk management is ISO 31000. It offers a framework to assist businesses of all sizes and in all sectors in identifying, evaluating, and managing risks in an organized and economical manner. Organizations of any size or industry can benefit from the structure, concepts, and processes offered by ISO 31000, which enables them to manage risks in an organised and economical manner. Any kind of risk (e.g., information security risks, business continuity risks, financial risks, environmental risks, quality risks, etc.) can be managed thanks to its guiding principles, framework, and procedure.
What Risk Management Process is Outlined in ISO 31000?
Although ISO 31000 lacks precise guidelines, clause 6 of the document offers broad recommendations on the risk management process and outlines the six actions that must be taken.
Interaction and Advice: Throughout the various risk management phases, certain actions are taken to make sure that pertinent internal and external stakeholders:
- Recognise, comprehend, and know how to manage the risks
- Get input and knowledge to make the right decisions.
These tasks frequently entail integrating various specialities and taking into account various viewpoints and situations when completing the remaining risk management tasks.
Extent, Situation, and Standards: Determining our goals and making an effort to comprehend the internal and external variables that could affect our achievement are the appropriate first steps in the risk management approach. Before risk identification, this phase—known as “Scope, context and criteria”—is crucial. Developing proper risk criteria is essential to the ISO 31000 risk management process. These criteria must be created during context establishment and then implemented during risk evaluation. The level of risk that the company may or may not assume is referred to as the risk criteria. Organizations may take the following into account when determining the risk criteria:
- Kind and character of uncertainty
- Technique for identifying and gauging the possibility of repercussions
- Factors linked to time
- Risk levels Capacity of the organization Combination management
Risk Assessments: It includes three activities in sequences
- Risk Identification: Identifying risks involves comprehending situations, threats, and uncertainties as well as compiling a list of all the risks.
- Risk Analysis: Understanding the potential effects and likelihood of risks is known as risk analysis. Prioritising risks is made possible via risk analysis.
- Risk Evaluation: Risk evaluation is the process of defining each risk’s relative priority by using the risk criteria that were created at the time the context was defined.
Risk Treatments: This step comes after risk assessments. It includes deciding on and carrying out risk-reduction strategies. Comparing possible benefits to implementation costs or efforts of alternatives is part of the selection process. You can choose from one or more of the following options:
- Avoidance: If the risk is too high you can decide not to start the activity that you planned. For example, you can avoid risk by not launching a new branch of your business at all if the location where you intend to do so is fraught with too many stringent laws.
- Sharing: You have the option to transfer the risk to a third party. This is the exact reason joint ventures are there. You collaborate with another business to open your branch since it is skilled at taking advantage of the laws.
- Transferring: A third party may get all or a portion of the risk. Companies might, for instance, purchase insurance or outsource a portion of their IT security-related operations.
- Acceptance: You might choose to take the chance if you are informed of the potential outcomes. You merely set up the branch in a heavily controlled location. Retaining risk is another name for acceptance.
- Decrease: The most popular strategy is risk reduction, which involves adopting mitigation strategies to lower risk levels. As an illustration, teach your employees how to spot a phishing email. Alternatively, you can lower the chance of data loss by putting backup procedures in place.
Monitor and Review: Monitoring is the process of continuously assessing performance in real-time and contrasting it with necessary or expected performance. Periodically or on the spot, the review entails assessing the existing state of affairs for alterations in the industry, organizational procedures, or surroundings. It is an endeavour to ascertain whether the framework and procedure are appropriate, sufficient, and efficient in achieving the stated goals.
Reporting and Recording: The risk management process is documented and communicated. It should be recorded and reported. Businesses are decided what should they record like events, incidents, and compliances. These records provide information for decision-making to maximize the effectiveness of activities.
For ISO 31000 Certification Consultant
Punyam.com boasts a highly-skilled, knowledgeable, and proficient workforce with extensive experience implementing ISO 31000 risk management in all shapes and sizes of businesses worldwide. Punyam.com, an ISO 31000 consultants organization, has vast experience implementing ISO 31000:2018 in companies of all sizes and all industry sectors. We ensure that the adoption of the ISO 31000 standard becomes a way of life for the company, laying the groundwork for comprehensive risk management and forward-thinking organizational culture, rather than just a documentation task.