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Risk Management and ISO 31000

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An overview of the ISO 31000 standard for risk management.

Risk Management and ISO 31000

  1. 1. Risk Management and ISO 31000 Doug Newdick
  2. 2. What Is Risk Management? <ul><li>Risk is: </li></ul><ul><ul><li>The effect of uncertainty on the ability of an organisation to meet its objectives. </li></ul></ul><ul><li>Risk management is: </li></ul><ul><ul><li>The range of activities that an organisation intentionally undertakes to understand and reduce these effects. </li></ul></ul><ul><li>Effective risk management is: </li></ul><ul><ul><li>Executing these activities efficiently and in a way that actually and demonstrably improves the ability of the organisation to meet its objectives in a repeatable fashion. </li></ul></ul>
  3. 3. What Is ISO 31000? <ul><li>ISO 31000:2009 is: </li></ul><ul><ul><li>An international standard that provides principles and guidelines for effective risk management </li></ul></ul><ul><ul><li>Not specific to any industry or sector </li></ul></ul><ul><ul><li>Able to be applied to any kind of risk </li></ul></ul><ul><ul><li>Able to be applied to any kind of organisation </li></ul></ul><ul><ul><li>Intended to be tailored to meet the needs of the organisation </li></ul></ul><ul><li>“ The generic approach described in this Standard provides the principles and guidelines for managing any form of risk in a systematic, transparent and credible manner and within any scope and context.” </li></ul>
  4. 4. What Does ISO 31000 Cover? <ul><li>ISO 31000:2009 contains: </li></ul><ul><ul><li>A set of risk management terms and their definitions </li></ul></ul><ul><ul><li>A set of principles for guiding and informing effective risk management for an enterprise </li></ul></ul><ul><ul><li>An outline and process for creating a risk management framework </li></ul></ul><ul><ul><li>An outline and process for creating a risk management process </li></ul></ul><ul><li>ISO 31000 is: </li></ul><ul><ul><li>Clear </li></ul></ul><ul><ul><li>Sensible </li></ul></ul><ul><ul><li>Brief (24 pages) </li></ul></ul>
  5. 5. What Does ISO 31000 Not Cover? <ul><li>Detailed instructions on how to manage risk </li></ul><ul><li>A complete risk management framework </li></ul><ul><li>A complete risk management process </li></ul><ul><li>Formats or attributes for describing risks </li></ul><ul><li>Templates </li></ul><ul><li>Guidance on how to identify risks </li></ul><ul><li>Advice on how to manage risks for a specific domain </li></ul>
  6. 6. Background to ISO 31000 <ul><li>Australia and NZ developed AS/NZS 4360:1999 in 1999. This was revised and reissued as AS/NZS 4360:2004 in 2004. Australia and New Zealand led the world in enterprise risk management at this point! </li></ul><ul><li>There was no agreed de jure or de facto international standard in place at this stage. There were a small number of competing frameworks which were regarded as unsatisfactory. </li></ul><ul><li>In 2005 the International Standards Organisation started work on ISO 31000 using AS/NZS 4360:2004 as its first draft. </li></ul><ul><li>ISO 31000 was issued to widespread acclaim in 2009. </li></ul>
  7. 7. ISO 31000 – An Overview Principles guide the creation of the framework The framework defines the process The performance of the process feeds back into the framework
  8. 8. ISO 31000 – An Overview: Principles
  9. 9. ISO 31000 – An Overview: Framework
  10. 10. ISO 31000 – An Overview: Process
  11. 11. Why Use ISO 31000? <ul><li>Save yourself time and effort: </li></ul><ul><ul><li>Using the terms, principles and guidelines in ISO 31000 means you don’t have to spend time and effort creating your own. </li></ul></ul><ul><ul><li>You can spend time on the things that really add value – managing the actual risks. </li></ul></ul><ul><li>Facilitate communication: </li></ul><ul><ul><li>Avoid misunderstandings by using concepts and terms that are well known in the risk management community. </li></ul></ul><ul><li>Provide higher quality output: </li></ul><ul><ul><li>Take advantage of the significant expertise in risk management that the ISO has used in coming up with the standard. </li></ul></ul><ul><ul><li>Ensure you don’t miss out any aspects of risk management by using the standard as a checklist. </li></ul></ul>
  12. 12. How Do I Apply ISO 31000? <ul><li>When should I use ISO 31000? </li></ul><ul><ul><li>When you are asked to identify or assess risks </li></ul></ul><ul><ul><li>When you are asked to manage risks </li></ul></ul><ul><ul><li>When you are asked to assess a risk management framework or process </li></ul></ul><ul><li>How should I use ISO 31000 </li></ul><ul><ul><li>Use it to frame the scope of the work </li></ul></ul><ul><ul><li>Use it to guide the engagement </li></ul></ul><ul><ul><li>Use it to create a risk management process </li></ul></ul>
  13. 13. ISO 31000 In Summary <ul><ul><li>ISO 31000 gives you a structured, credible foundation for discussions with about risk and risk management. </li></ul></ul><ul><ul><li>ISO 31000 gives you a starting point for a risk management process if you don’t have one. </li></ul></ul><ul><ul><li>ISO 31000 gives you a standard vocabulary for talking about risks and risk management. </li></ul></ul><ul><ul><li>ISO 31000 gives you a baseline for comparisons and assessments of risk management processes. </li></ul></ul>
  14. 14. For Further Resources <ul><li>Visit my blog: </li></ul><ul><ul><li>http://dougnewdick.wordpress.com </li></ul></ul><ul><li>Follow me on Twitter: </li></ul><ul><ul><li>@dougnewdick </li></ul></ul>

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