RISK MANAGEMENT

Risk Management

Risk Management

Introduction

The International Organisation for Standardisation has published a new standard for risk administration, ISO 31000:2009, Risk Management - Principles and Guidelines. Whilst this sounds like a very dry name, don't be alerted - ISO 31000 takes a widespread sense set about to risk management. The significance of the standard will be seen as it helps organisations of any size and in any industry strive towards their business goals by organising risk effectively.

ISO 31000 pulls simultaneously and replaces a number of similar worldwide standards and will also supersede nationwide standards such as AS/NZS 4360:2004. In detail, AS/NZS 4360, which was due for revision in 2009, has formed the basis of ISO 31000. (Hasselblad, 2007 175)

There is no question AS/NZS 4360 has been an outstanding success. Developed in Australia and New Zealand, the standard has been amply acknowledged in the local area and beyond. Ask any antipodean business how they organise risk, you can almost assurance the answer will be the same - as asserted by the process characterised by AS/NZS 4360.

The Purpose Of Iso 31000

While persons employed in the numerous distinct forms of risk management always have the same aim, to supply a sound basis for decisions on if risks are agreeable and, if necessary, get dependable data how they can be administered with, there are numerous distinct definitions of risk and of the risk management process elements and numerous distinct versions of the process to be followed.(Hall, 2004,932) These have all evolved for good historical reasons but individuals and organizations, if they are for earnings or not, regulated or controller, require making assured and balanced decisions about all risks they have to deal with, on a consistent and dependable basis.

For these reasons, ISO, the worldwide body ascribed with accomplishing standardization, set out to accomplish consistency and reliability in risk management by conceiving a standard that would be applicable to all forms of risk. This would contain:

One vocabulary;

A set of presentation criteria;

One, widespread overarching process for recognising, investigating, assessing, and healing risks;

Guidance on how that process should be incorporated into the decision-making processes of any organization.

ISO conceived an employed assembly comprising experts nominated from 28 countries (up to three from each) and from numerous other specialist organizations to direct the development of the standard and the associated vocabulary. While the experts possess a very broad variety of risk management know-how profited in numerous sectors and applications, their primary function has been to represent the views of their respective nationwide and sector reflector committees and organizations.(Ahlfeldt, 2008,78)

 

What is Risk?

Standards are not in writing from the starting, but from the middle out and it soon became clear to the members of the employed assembly that little genuine progress could be made with the ISO standard until they all acquiesced on a delineation of risk that arose from a clear and widespread understanding of what risk is and how it occurs.(Ahlfeldt, 2008,78) Dozens of nominee definitions were considered before the employed assembly reached at: effect of doubt on ...