ISO Publishes New Standard for Effective Risk Management

Complemented with risk management vocabulary guide

Published: Monday, November 30, 2009 - 16:40

(ISO: Geneva) -- A new international standard, ISO 31000:2009—“Risk management—Principles and guidelines,” will help organizations of all types and sizes to manage risk effectively.

ISO 31000 provides principles, framework, and a process for managing any form of risk in a transparent, systematic, and credible manner within any scope or context.

(ISO: Geneva) -- A new international standard, ISO 31000:2009—“Risk management—Principles and guidelines,” will help organizations of all types and sizes to manage risk effectively.

ISO 31000 provides principles, framework, and a process for managing any form of risk in a transparent, systematic, and credible manner within any scope or context.

At the same time, ISO is publishing ISO Guide 73:2009—“Risk management vocabulary,” which complements ISO 31000 by providing a collection of terms and definitions relating to the risk management.

“All organizations, no matter how big or small, face internal and external factors that create uncertainty on whether they will be able to achieve their objectives. The effect of this uncertainty is ‘risk’ and it is inherent in all activities,” explains Kevin W. Knight, chair of the ISO working group that developed the standard.

“In fact, it can be argued that the global financial crisis resulted from the failure of boards and executive management to effectively manage risk. ISO 31000 is expected to help industry and commerce, public and private, to confidently emerge from the crisis,” continues Knight.

The standard recommends that organizations develop, implement, and continuously improve a risk management framework as an integral component of their management system.

“ISO 31000 is a practical document that seeks to assist organizations in developing their own approach to the management of risk,” says Knight. “But this is not a standard that organizations can seek certification to. By implementing ISO 31000, organizations can compare their risk management practices with an internationally recognized benchmark, providing sound principles for effective management. ISO Guide 73 will further ensure that all organizations are on the same page when talking about risk.”

ISO 31000 is designed to help organizations:

• Increase the likelihood of achieving objectives
• Encourage proactive management
• Be aware of the need to identify and treat risk throughout the organization
• Improve the identification of opportunities and threats
• Comply with relevant legal and regulatory requirements and international norms
• Improve financial reporting
• Improve governance
• Improve stakeholder confidence and trust
• Establish a reliable basis for decision making and planning
• Improve controls
• Effectively allocate and use resources for risk treatment
• Improve operational effectiveness and efficiency
• Enhance health and safety performance, as well as environmental protection
• Improve loss prevention and incident management
• Minimize losses
• Improve organizational learning
• Improve organizational resilience

ISO 31000 and ISO Guide 73 can be applied to any public, private, or community enterprise, association, group, or individual. The documents will be useful to:

• Those responsible for implementing risk management within their organizations
• Those who need to ensure that an organization manages risk
• Those needing to evaluate an organization’s practices in managing risk
• Developers of standards, guides, procedures, and codes of practice relating to the management of risk

Both documents were developed by the ISO working group on risk management.

About The Author

ISO

The International Organization for Standardization (ISO) is the world’s largest developer and publisher of international standards. ISO is a network of the national standards institutes of 162 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system. ISO is a nongovernmental organization that forms a bridge between the public and private sectors. ISO enables a consensus to be reached on solutions that meet both the requirements of business and the broader needs of society. View the ISO Standards list.