Discover the Principles of the ISO 31000 Risk Management Standard

Summary

The article discusses the eight principles of the ISO 31000 risk management system. It provides key insights into each principle to help readers efficiently integrate them into their risk control systems.

According to the World Economic Forum, in 2020, the global cost of operational risk was approximately $12 trillion. The most common contributors to these losses were cyber-attacks, regulatory compliance, natural disasters, and employee fraud.

One lesson many organisations learn from these disastrous losses is that having an effective risk management system in place is essential regardless of the size and industry of a company, and this is where the ISO 31000 comes in.

More than 100,000 organisations in over 190 countries have adopted ISO 31000 to reduce risk exposure, identify opportunities and threats, allocate risk treatment resources, and improve decision-making.

Today’s post discusses the eight principles of the ISO 31000 to help you better understand the standard and integrate it more effectively in your company.

So, keep reading!

The Principles of the ISO 31000 Risk Management Standard

The eight principles of the ISO 31000:2018 are the foundation of its framework and processes. The principles focus on value creation, protection, risk management system designing, planning, implementation, and operation.

Understanding these principles is crucial for establishing risk management frameworks and processes.

1. Integrated

• Risk management should be a part of every department’s decision-making and organisational activities.
• It should be embedded into the processes of an organisation and its management responsibilities.

2. Structured and comprehensive

• Use clear and efficient guidelines and procedures to structure your risk management system to maintain efficiency and productivity.
• Approach risk management procedures systematically to make them comprehensive for everyone involved and contribute to consistent results.

3. Personalised

• Tailor the ISO 31000 risk management processes to your organisation’s external and internal goals.
  • Start by establishing the context and objectives of your organisation.

4. Inclusive

• Ensure all relevant stakeholders are involved in the risk management process.
• Your risk management system should be easy-to-understand and transparent. It should not include any confusing jargon to maintain inclusivity.

5. Dynamic

• Your risk management system should acknowledge the constant changes in the organisation.
• The system must respond to the changes in a timely and efficient manner.
• With external and internal events constantly occurring, new risks emerge and disappear. So, ensure your risk treatment strategies are anticipatory.

6. Human and cultural factors

• Human culture and behaviour can significantly influence risk management tactics.
• Your risk management system should consider the capabilities of your organisation, as well as the goals of the stakeholders and shareholders within and around the company.

7. Available information

• Organisations should strategically use the best available data on historical and current events and address the limitations of data as well.
• All known information should be accessible to relevant stakeholders.

8. Continual Improvement

• To ensure your organisation’s resiliency, improve its processes continually through experience.
• Use the plan-do-check-adjust method to continually improve the risk management processes.
• Adapt your procedures to the risk analysis results to grow your organisation in every aspect.

Endnote

These principles together build the foundation of the ISO 3100 risk management. Without this foundation, your risk-controlling systems will never be efficient. Therefore, always incorporate these principles into your ISO 3100 system to manage uncertainties and achieve organisational goals.

Author Bio

Damon Anderson is an ISO consultant with over two decades of experience. He offers courses and training for different ISO standards to help companies learn how to implement them.