ISO 31000 Risk Management: The actionable guidelines to manage risk

ISO 31000 Risk Management: The actionable guidelines to manage risk

ISO 31000 Risk Management. Continuous improvement is another significant concept to understand for the ISO 31000 risk management standard. Without a company culture strongly aligned with principles of constant improvement, organisations will struggle to implement, let alone maintain, successful risk management programs. This can be challenging in practice, as cultivating a risk management attitude within a company involves aligning risk initiatives with existing company values, policies and, to put it simply, convincing everyone involved that risk management is worthwhile. However, improving risk culture is possible, and, like many things, it becomes a lot easier when you have a process for it.

Such a process can be separated into three stages:

• Cultural awareness
• Cultural change
• Cultural refinement

When the company culture is aligned, most organisations will find that their employees are on the same page and playing as a team. The organisation is stronger because employees trust one another to do the right thing. Those “grey areas” of rule-bending and non-compliance are no longer grey as the organisation culture dictates that only ethical behaviour and compliance with Risk Management Standards will be acceptable.

The ISO 31000 is at the forefront of a strategic approach to risk identification and subsequent mitigation of risk management. For instance, knowledge of risk is a necessary factor for the effective management process of such risks. Additionally, using the tested principles and practices of the ISO 31000 Risk Management Standard allows an organization to tailor the recommendations in the ISO 31000 Risk Management Standard to its contextual business environment.

The ISO 31000 helps establish an ethical culture by educating your personnel on the following:

• Offers a new clarity on risk as to the result of ambiguity on the possibility of accomplishing the organisation’s objectives thus stressing the significance of identifying goals before attempting to control risks and emphasising the role of ambiguity.
• Specifies a risk management agenda with different organisational practices, positions and obligations in the management of risks.
• Summarizes an executive attitude where risk management is seen as a fundamental component of strategic decision-making and the management of change.
• Presents the concept of risk appetite, or the degree of risk which the organisation acknowledges to take on in place for the expected value

But how does ISO 31000 Risk Management Standard aid in the three stages of strengthening company culture?

Phase one: Building and strengthening cultural awareness

The first stage is building cultural awareness; this will take the form of communications, training, and general education initiatives within the organisation. Although it may not necessarily be the ISO certification, here is where companies set risk management expectations and objectives, define roles and responsibilities, and communicate all these things with their employees. You shouldn’t expect your employees to conform to your ideas about risk management without first taking the time to educate and inform them, whether through formal training or access to knowledge base material or similar.

Successfully building and strengthening cultural awareness about continuous improvement includes:

• Establish a common risk management vocabulary
• Make sure communications are consistent with said vocabulary and that everyone in the organisation has clear access to all relevant documents
• Be clear about risk management responsibilities and accountabilities.
• Launch and maintain training programs, providing training support and guidance where needed and as required by separate roles and responsibilities within the organisation
• Make sure onboarding processes cover risk management.
• Make sure recruitment processes cover risk management.

Phase two: Changing the way the organisation operates

Once a firm foundation of cultural awareness regarding continuous improvement has been established, it’s time to start thinking about how to change how the organisation operates to reflect these values gradually. This phase begins by recognising and rewarding employees for paying attention to risk and responding to risk in a way that challenges the previously established (pre-continuous improvement) status quo. These kinds of motivational systems, rewarding and penalising behaviour according to the established ideals of continuous improvement outlined in the early planning stages, will result in the gradual but certain shift towards a proliferation of continuous improvement-conscious company culture. Another essential element is being able to recognise the talent that conforms with the desired vision of constant improvement and capitalising on this alignment by placing them accordingly in relevant, optimised positions of responsibility or seniority. It’s getting people in the right place to drive the right kind of results.

Some important considerations for this phase:

• Utilising challenge as a motivator for driving cultural change
• Gamifying and quantifying risk performance metrics and rewarding/penalising behaviour accordingly.
• Considering risk management and continuous improvement culture in talent management approaches.

Phase three: Optimising and refining the cultural ecosystem

The third and final stage of cultural adoption of continuous improvement takes place once the company culture has already matured to the point of widespread adoption and desired values are already well-entrenched. At this point, the focus shifts to monitoring performance versus expectations and attempting to tweak and refine the system to improve cultural adoption further. The expectations can and will be influenced by a wide range of stakeholders, not just top management; employees, a board of directors, analysts, customers, investors – they all have a say in the definition of cultural expectations because these expectations should directly reflect the whole entity that is the organisation, made up of all its constituent stakeholder parts.

Steps taken during this phase might include:

• Iterating feedback and observations from risk management into training, education, resources, and communications.
• Making sure stakeholders are held responsible for their actions
• Make sure any risk performance metrics or quantifiers are adjusted to reflect risk strategy, goals, and objectives changes.
• The capacity to redeploy and reassign individuals within an organisation according to desired risk culture goals
• Continually reflecting on and refining risk culture by continually changing business goals, objectives, and strategies.

Why consider the ISO 31000 Risk Management Standard?

An organisations administration has a huge role in identifying ‘holes’ in the company culture in a bid to maximize an organisation’s efficiency and productivity. The ISO 31000 Risk Management Standard offers the best strategies to manage an organisation in implementing a risk management system. Of note, ISO 31000 allows organisations to identify risks and formulate key performance indicators to monitor and evaluate the extent to which an organization acts within the law and conducts ethical business. This standard can be used by any organisation, large or small and regardless of industry sector. It is a compliant tool, which can be adapted according to the size and nature of the organisation and the risk it faces.  In sum, the ISO 31000 Risk Management Standard not only facilitates the combat against risk management in business environments but also promotes efficiency, productivity and the positive company culture of an organisation.

At ABAC, we recognise that the ISO 31000 Risk Management Standard be used by organisations to compare their risk management practices with an internationally recognised benchmark and this, in turn, helps our specialists to provide sound principles for effective management and corporate governance. That’s why our experts always tailor their advice in a manner that is most beneficial to your organisation. Although the goal is to minimise your risks, the journeys are not always uniform.  ABAC’s ISO 31000 Risk Management Awareness training course will familiarise the company’s employees with the principles of, and framework for risk management. This provides employees with the recognition of how risk management can be applied effectively to enhance the detection of prospects and risks within the organisation and make successful use of assets to control risk as a means of expanding the company’s execution.