In case the organization does not have risk registers at all, the top management should provide the risk management team with enough information on what risks have been faced in the past and what were their sources. In case the organization has not faced any risk in the past, they still should identify potential risks so the organization does not have to suffer any consequences.
Some risk types presented by PECB that can be faced by organizations of any type include:. Operational risk — the loss resulting from inadequate procedures, policies, and systems within the organization.
Financial risk — the process of coping with uncertainties that derive from financial markets. Security risk - the losses encountered due to the information security incidents or physical incidents. Legal risk — the risk that emerges because of the inability to comply with the applicable regulatory obligations. The ISO underlines the development of a framework that will fully integrate the risk management process into an organization.
The framework assures that an organization-wide process is supported, iterative and effective. That means that risk management will be an active component in governance, strategy and planning, management reporting processes, policies, values and culture. However, the commitment of the top management alone is not enough; therefore, the commitment of the whole organization needs to be pursued a proper risk culture as discussed above.
Successful implementation of the ISO risk management framework requires the engagement and awareness of stakeholders. This allows organizations to explicitly address uncertainty in decision-making, while also ensuring that any new or subsequent uncertainty can be taken into account as it arises. The framework includes activities such as: demonstrating leadership and commitment to risk management, integrating risk management into organizational processes, designing the framework for managing risk which includes understanding the organization and its context, articulating risk management commitment, assigning roles, authorities, responsibilities and accountabilities, allocating appropriate resources and establishing communication and consultation , implementing the risk management process, evaluating the risk management process and adapting and continually improving the framework.
The main purpose of the risk management process is to enable the organization to assess the existing or potential risks that may be faced, evaluate the risks by comparing the risk analysis results with the established risk criteria, and treat such risks using the risk treatment options.
The organization should use such process in the decision making process. While establishing the context, the organization should define the purpose and scope of its risk management activities, and determine the objectives of the risk management process and the specific objectives of risk assessment. Furthermore, the organization should define the scope and boundaries related to the risk management process and identify all of the constraints that affect the scope. After identifying the constraints, the organization should define the risk criteria which will be used during the whole process.
Risk identification : The identification of risks should be a formal, structured process that includes risk sources, events, their causes and their potential consequences. The risk identification process enables the organization to identify its assets, risk sources, risk events, existing measures and consequences.
By identifying such elements the organization will be ready to begin the risk analysis process. Risk analysis : The organization should analyze each risk that was identified in the previous step.
Based on the level of risk that is determined after the risk analysis, the organization is able to define whether the risk is acceptable or not. As so, if the risk turns out to be unacceptable, the organization can take actions to modify the risk to correspond to the acceptable level of risk.
The organization should use a formal technique to consider the consequence and likelihood of each risk, and these techniques can be qualitative, semi-quantitative, quantitative, or a combination thereof, based on the circumstances and the intended use.
Risk evaluation : This step offers the organization the opportunity to have a mechanism that helps them rank the relative importance of each risk, so that a treatment priority can be established. Risk treatment : Proper risk management requires rational and informed decisions about risk treatment.
Typically, such treatments include: avoidance of the activity from which the risk originates, risk sharing, managing the risk by the application of controls, risk acceptance and taking no further action, or risk taking and risk increasing in order to pursue an opportunity. Remember that organizations do not always find themselves in trouble because of their excessive and reckless behavior. Sometimes organizations fall behind their competitors as a result of their reluctance to take risks and pursue opportunities.
The communication seeks to promote awareness and understanding of risk and the means to respond to it, whereas consultation involves obtaining feedback and information to support decision-making.
Recording and reporting : Another step of the risk management process based on ISO is the recording and reporting, i. Status : Published. Publication date : This standard contributes to the following Sustainable Development Goals :. CHF 88 Buy. Life cycle Previously Withdrawn. Final text received or FDIS registered for formal approval. Proof sent to secretariat or FDIS ballot initiated: 8 weeks. Close of voting. Proof returned by secretariat. International Standard under systematic review.
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