In today's business world, risk management is the most relevant and most worrying factor for businesses. In general, risk can be the driving force of strategic decisions, or it can be a cause of uncertainty in businesses, or simply a result of the business's activities.
However, the enterprise-wide risk management approach requires the entity to consider the potential impacts of all types of risks on processes, activities, products and services.
The recent global financial crises have once again demonstrated the importance of adequate risk management. At this point, new risk management standards, especially the ISO 31000 Enterprise Risk Management System standard designed by the International Standards Organization (ISO), have been published. The ISO 31000 standard provides a structured approach to the implementation of enterprise risk management.
Effective risk management is a process supported by a set of principles. A successful risk management initiative should be commensurate with the level of risk in the entity. In other words, the size, quality and complexity of the enterprise are important factors. It should also be compatible with other corporate activities and be sensitive to dynamically changing conditions.
The ISO 31000 Enterprise Risk Management System standard was published in 2009 and is an internationally recognized standard for the implementation of risk management principles.
The ISO 31000 Enterprise Risk Management System helps businesses develop a risk management strategy to effectively identify risks and mitigate impacts. In this way, it is possible for businesses to achieve their goals and protect their assets.
The overall objective of the ISO 31000 system is to develop a risk management culture in which employees and stakeholders are aware of the importance of monitoring and managing risks. The application of this standard helps enterprises to see the positive opportunities and negative consequences related to various risks, while being more aware of the allocation of resources and making more effective management decisions. Moreover, this standard is an active component in the effective management and improvement of performance of enterprises.
With the ISO 31000 Enterprise Risk Management System, businesses can identify potential hazards in advance, calculate the losses they will cause to the company in the event of such hazards, take the necessary precautions in advance to avoid the risks, foresee acceptable values for the risks that can be prevented and predict what should be done when the risk occurs. plans.
Many principles of the ISO 31000 Enterprise Risk Management System standard are similar to those previously issued in this regard. However, the ISO 31000 standard introduces a new risk definition and introduces the 11 risk principle. These risk principles are:
Risk management creates value
Risk management is an integral part of business processes
Risk management is part of decision making
Risk management clearly addresses insecurity
Risk management systematically, structured and programmed
Risk management is based on the best available information
Risk management, adapted
Risk management considers human and cultural factors
Risk management is transparent and inclusive
Risk management is dynamic, repetitive and sensitive to change
Risk management facilitates continuous improvement
The purpose of the ISO 31000 standard is to provide general rules for establishing a risk management framework in the enterprise where risk management is applied. This standard applies to all businesses, regardless of size and sector.
ISO 31000 Enterprise Risk Management System is based on the following three basic regulations related to risk management:
ISO 31000: 2009 Risk management - Code of practice and rules
ISO Guide 73: 2009 Risk management - Glossary
ISO / IEC 31010: 2009 Risk management - Risk assessment techniques
These standards have been published by Turkish Standards Institute (TSE) under the following headings:
TS ISO 31000 Risk management - Rules
TSE ISO Guide 73 Risk management - Terms and definitions
TS EN 31010 Risk management - Risk assessment techniques
The ISO 31000 standard was last revised in 2018. Therefore, the current version is ISO 31000: 2018. This version provides more strategic guidance than the previous version. Both the involvement of senior management and the integration of risk management into the business have become more prominent. This latest release includes the principles of commitment to risk management, appropriate levels of authority, responsibility and accountability within the enterprise and the allocation of necessary resources for risk management.
According to the ISO 31000 Enterprise Risk Management System standard, risk management activities are a part of the business structure, processes, objectives, strategy and activities. Risk management focuses more on value creation. The main objective is to create a common language within the business and to make activities clearer and easier.
Risks can affect a business in the short, medium and long term. These risks are generally related to the business activities, strategies and approach of doing business. The strategy sets out the long-term goals of businesses. Business approaches define how businesses want to achieve change. The activities are the ongoing routine activities of the enterprises.
There are many definitions of risk and risk management. According to ISO Guidance 73, risk is the effect of uncertainty on targets. This effect can be positive, negative or deviated from the expected. Risk occurs in the form of an event, a change in conditions, or unexpected consequences. According to these definitions, risks and targets are interrelated. Risk assessment includes identification of risks.
ISO 31000 Enterprise Risk Management System standard, the risk management process to successfully implement, support and establish a structure for businesses who want to continue.
The risk management process requires the coordination of the following activities:
Recognition or identification of risks
Ranking or assessment of risks
Responding to significant risks (endure, treat, transfer or end)
Checking resources
Planning of reactions
Monitoring and reporting of risk performance
Risk management review
The ISO 31000 standard describes the components of a risk management implementation framework and provides the basic steps to be taken in implementing the risk management process. The first component of the ISO 31000 framework is the authorization and commitment of management. This is followed by establishing a framework, implementing risk management, monitoring, reviewing and developing.
First, it is determined whether the organization meets the mandatory requirements of the standard and whether to proceed to the next stage.
It is checked whether necessary procedures and audits have been developed and your institution's readiness for evaluation is reviewed.
The findings that arise in the first two stages are evaluated and after all corrective actions are reviewed, document preparation is started.
To get an appointment, to get more detailed information or to request an evaluation, you can ask us to fill in our form and reach you.
