ISO 31000 is a family of standards relating to risk management codified by the International Organization for Standardization. The purpose of ISO 31000:2009 is to provide principles and generic guidelines on risk management. ISO 31000 seeks to provide a universally recognised paradigm for practitioners and companies employing risk management processes to replace the myriad of existing standards, methodologies and paradigms that differed between industries, subject matters and regions.
Currently, the ISO 31000 family is expected to include:
- ISO 31000:2009 – Principles and Guidelines on Implementation
- ISO/IEC 31010:2009 – Risk Management – Risk Assessment Techniques
- ISO Guide 73:2009 – Risk Management – Vocabulary
ISO 31000 was published as a standard on 13 November 2009, and provides a standard on the implementation of risk management. A revised and harmonised ISO/IEC Guide 73 was published at the same time. The purpose of ISO 31000:2009 is to be applicable and adaptable for "any public, private or community enterprise, association, group or individual." Accordingly, the general scope of ISO 31000 – as a family of risk management standards – is not developed for a particular industry group, management system or subject matter field in mind, rather to provide best practice structure and guidance to all operations concerned with risk management. It began the process for its first revision on May 13, 2015. A draft International standard (DIS), which was open for public comment, was published on February 17, 2017.
An update to ISO 31000 was added in early 2018. The update is different in that "ISO 31000:2018 provides more strategic guidance than ISO 31000:2009 and places more emphasis on both the involvement of senior management and the integration of risk management into the organization."
ISO 31000:2009 provides generic guidelines for the design, implementation and maintenance of risk management processes throughout an organization. This approach to formalizing risk management practices will facilitate broader adoption by companies who require an enterprise risk management standard that accommodates multiple ‘silo-centric’ management systems.
The scope of this approach to risk management is to enable all strategic, management and operational tasks of an organization throughout projects, functions, and processes to be aligned to a common set of risk management objectives.
Accordingly, ISO 31000:2009 is intended for a broad stakeholder group including:
- executive level stakeholders
- appointment holders in the enterprise risk management group
- risk analysts and management officers
- line managers and project managers
- compliance and internal auditors
- independent practitioners.
One of the key paradigm shifts proposed in ISO 31000 is a controversial change in how risk is conceptualised and defined. Under both ISO 31000:2009 and ISO Guide 73, the definition of "risk" is no longer "chance or probability of loss", but "effect of uncertainty on objectives" ... thus causing the word "risk" to refer to positive consequences of uncertainty, as well as negative ones.
A similar definition was adopted in ISO 9001:2015 (Quality Management System Standard), in which risk is defined as, "effect of uncertainty." Additionally, a new risk related requirement, "risk-based thinking" was introduced there.
Likewise, a broad new definition for stakeholder was established in ISO 31000, "Person or persons that can affect, be affected by, or perceive themselves to be affected by a decision or activity." It is the verbatim definition given for the term "interested party" as defined in ISO 9001:2015.
ISO 31000:2009 has been developed on the basis of an existing standard on risk management, AS/NZS 4360:2004 (In the form of AS/NZS ISO 31000:2009). Whereas the initial Standards Australia approach provided a process by which risk management could be undertaken, ISO 31000:2009 addresses the entire management system that supports the design, implementation, maintenance and improvement of risk management processes.
The intent of ISO 31000 is to be applied within existing management systems to formalize and improve risk management processes as opposed to wholesale substitution of legacy management practices. Subsequently, when implementing ISO 31000, attention is to be given to integrating existing risk management processes in the new paradigm addressed in the standard.
The focus of many ISO 31000 'harmonization' programmes have centered on:
- Transferring accountability gaps in enterprise risk management
- Aligning objectives of the governance frameworks with ISO 31000
- Embedding management system reporting mechanisms
- Creating uniform risk criteria and evaluation metrics
While adopting any new standard may have re-engineering implications to existing management practices, no requirement to conform is set out in this standard. A detailed framework is described to ensure that an organization will have "the foundations and arrangements" required to embed needed organizational capabilities in order to maintain successful risk management practices. Foundations include risk management policy, objectives and mandate and commitment by top management. Arrangements include plans, relationships, accountabilites, resources, processes and activities.
Accordingly, senior position holders in an enterprise risk management organisation will need to be cognisant of the implications for adopting the standard and be able to develop effective strategies for implementing the standard, embedding it as an integral part of all organizational processes including supply chains and commercial operations. In domains that concern risk management which may operate using relatively unsophisticated risk management processes, such as security and corporate social responsibility, more material change will be required, such as creating a clearly articulated risk management policy, formalising risk ownership processes, structuring framework processes and adopting continuous improvement programmes.
Certain aspects of top management accountability, strategic policy implementation and effective governance frameworks including communications and consulation, will require more consideration by organisations that have used previous risk management methodologies which have not specified such requirements.
ISO 31000:2009 gives a list on how to deal with risk:
- Avoiding the risk by deciding not to start or continue with the activity that gives rise to the risk
- Accepting or increasing the risk in order to pursue an opportunity
- Removing the risk source
- Changing the likelihood
- Changing the consequences
- Sharing the risk with another party or parties (including contracts and risk financing)
- Retaining the risk by informed decision
ISO 31000 has not been developed with the intention for certification. (2009)
- ISO: ISO/IEC 31000 page
- "New ISO standard on project management". ISO. 2012.
- ISO 31000 catalogue http://www.iso.org/iso/catalogue_detail.htm?csnumber=43170
- "The revision of ISO 31000 on risk management started 2015-05-13". ISO. Retrieved 2017-02-23.
- "ISO/DIS 31000 – Risk management – Guidelines". ISO. Retrieved 2017-02-23.
- ISO 31000 Update
- "ISO 9001:2015 – Just published! (2015-09-23)". ISO. Retrieved 2017-02-23.
- "Risk and the ISO 9001 Revision". Retrieved 2017-02-23.
- ISO 31000 update: What it means to C-Suite Risk Owners
- Implications for ISO adoption http://www.optaresystems.com/index.php/optare/publication_detail/iso_31000_update_what_it_will_mean_for_a_cso/
- Standard International Organization for Standardization
- Standard AS/NZS ISO 31000:2009 Risk management – Principles and guidelines
- Discussion : LinkedIn discussion forum on ISO 31000:2009 Risk management – Principles and guidelines
- Article ISO 31000 : The Gold Standard, Alex Dali and Christopher Lajtha, Strategic Risk, September 2009