Principles of risk management
Enterprise risk management is a complex and multidimensional process involving not only entire organizations’ operational aspects, A variety of risk management tools and techniques are used to carry out the effective ERM policy and ensure risk awareness across the organization. It is important to consider how each tool complies with the standards developed by the International Organization for Standardization.
ISO 31000 is a suite of standards for risk management. It provides principles and guidelines to help companies build effective management systems. The International Organization for Standardization ISO recommends that the company’s risk management system be based on a list of principles. According to ISO, the system should be:
- Consolidate results across all entities and make accurate comparisons,
- Leverage existing controls for newly-identified risks, rather than duplicating them,
- Develop action plans aligned with controls and risks
ISO 31000 is a framework that can be used by any organization, including smaller ones, regardless of industry. Its use can help companies improve the identification of opportunities and risks and effectively allocate and use resources to treat risks. But ISO 31000 cannot be used for certification purposes. It only provides guidance for internal or external audit programs. It is worth reading the full information on ISO 3100 on the website of the International Organization for Standardization to fully comprehend the benefits of its recommendations.
First things first
Choosing a risk management tool that a company will use to improve its risk management processes is not a simple task. Thanks to the standards developed by ISO, organizations are equipped with one key initial criterion that makes selection much easier.
Simply put, risk management tools and techniques should follow the established principles of Risk Management included in ISO 31000 and support the universal model, unified standards and methodologies provided.
Compliance with globally accepted standards and principles of risk management are an absolute must-have for best GRC software.