ASNZS ISO 310002009
Risk management—
Principles and guidelines
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ASNZS ISO 310002009
This Joint AustralianNew Zealand Standard was prepared by Joint Technical
Committee OB007 Risk Management It was approved on behalf of the Council of
Standards Australia on 6 November 2009 and on behalf of the Council of Standards
New Zealand on 16 October 2009
This Standard was published on 20 November 2009

The following are represented on Committee OB007

Australian Computer Society
Commerce Commission New Zealand
Committee IT012
Department of Education and Early Childhood Development Victoria
Emergency Management Australia
Engineers Australia
Environmental Risk Management Authority New Zealand
Financial Services Institute of Australia
The Institute of Internal Auditors – Australia
Institution of Professional Engineers New Zealand
International Association of Emergency Managers
La Trobe University
Law Society of New South Wales
Massey University
Minerals Council of Australia
Ministry of Economic Development (New Zealand)
New Zealand Society for Risk Management
Risk Management Institution of Australasia
The University of New South Wales
University of Canterbury New Zealand

Keeping Standards uptodate
Standards are living documents which reflect progress in science technology and
systems To maintain their currency all Standards are periodically reviewed and
new editions are published Between editions amendments may be issued
Standards may also be withdrawn It is important that readers assure themselves
they are using a current Standard which should include any amendments which
may have been published since the Standard was purchased
Detailed information about joint AustralianNew Zealand Standards can be found by
visiting the Standards Web Shop at wwwsaiglobalcomau or Standards New
Zealand web site at wwwstandardsconz and looking up the relevant Standard in
the online catalogue
For more frequent listings or notification of revisions amendments and
withdrawals Standards Australia and Standards New Zealand offer a number of
update options For information about these services users should contact their
respective national Standards organization
We also welcome suggestions for improvement in our Standards and especially
encourage readers to notify us immediately of any apparent inaccuracies or
ambiguities Please address your comments to the Chief Executive of either
Standards Australia or Standards New Zealand at the address shown on the back
cover

This Standard was issued in draft form for comment as DR 09063

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ASNZS ISO 310002009
AustralianNew Zealand Standard™
Risk management—Principles and
guidelines


















COPYRIGHT
© Standards AustraliaStandards New Zealand
All rights are reserved No part of this work may be reproduced or copied in any form or by
any means electronic or mechanical including photocopying without the written
permission of the publisher
Jointly published by Standards Australia GPO Box 476 Sydney NSW 2001 and Standards
New Zealand Private Bag 2439 Wellington 6140

ISBN 0 7337 9289 8
Originated as ASNZS 43601995
Third edition 2004
Revised and redesignated as ASNZS ISO 310002009
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PREFACE
This Standard was prepared by Joint Standards AustraliaStandards New Zealand Committee
OB007 Risk Management to supersede ASNZS 43602004 Risk management
When ASNZS 43601999 was revised in 2004 (as part of a routine five yearly revision) it was
decided by the Joint AustralianNew Zealand Committee OB007 that rather than undertake a
similar revision in 2009 Standards Australia and Standards New Zealand would promote the
development of an international standard on risk management which would then be adopted
In 2005 the International Organization for Standardization (ISO) established a working group to
develop the first international risk management standard using ASNZS 43602004 as the first
draft The standard development process included extensive public consultation in Australia and
New Zealand and resulted in the publication of ISO 310002009
The main variations to ASNZS 43602004 as outlined in the Introduction are as follows
(a) Risk is now defined in terms of the effect of uncertainty on objectives
(b) The principles that organizations must follow to achieve effective risk management have
now been made explicit
(c) There is much greater emphasis and guidance on how risk management should be
implemented and integrated into organizations through the creation and continuous
improvement of a framework
(d) An informative Annex describes the attributes of enhanced risk management and
recognizes that while all organizations manage risk in some way and to some extent this
may not always be optimal
The process described for managing risk is identical to that in ASNZS 43602004
This Standard is identical with and has been reproduced from ISO 310002009 Risk
management—Principles and guidelines Minor changes have been made to the Introduction to
address the application of the Standard in Australia and New Zealand
As this Standard is reproduced from an International Standard the following applies
(i) Its number does not appear on each page of text and its identity is shown only on the
cover and title page
(ii) In the source text this International Standard’ should read this AustralianNew Zealand
Standard’
The term informative’ is used to define the application of the annex to which it applies An
informative annex is only for information and guidance

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CONTENTS
Page

ISO 310002009(E)
© ISO 2009 – All rights reserved iii

Contents Page
Foreword iv
Introductionv
1 Scope 1
2 Terms and definitions 1
3 Principles7
4 Framework 8
41 General 8
42 Mandate and commitment 9
43 Design of framework for managing risk10
431 Understanding of the organization and its context 10
432 Establishing risk management policy 10
433 Accountability11
434 Integration into organizational processes 11
435 Resources 11
436 Establishing internal communication and reporting mechanisms 12
437 Establishing external communication and reporting mechanisms 12
44 Implementing risk management 12
441 Implementing the framework for managing risk 12
442 Implementing the risk management process 13
45 Monitoring and review of the framework 13
46 Continual improvement of the framework 13
5 Process13
51 General 13
52 Communication and consultation 14
53 Establishing the context 15
531 General 15
532 Establishing the external context 15
533 Establishing the internal context15
534 Establishing the context of the risk management process 16
535 Defining risk criteria17
54 Risk assessment 17
541 General 17
542 Risk identification17
543 Risk analysis18
544 Risk evaluation 18
55 Risk treatment18
551 General 18
552 Selection of risk treatment options 19
553 Preparing and implementing risk treatment plans 20
56 Monitoring and review 20
57 Recording the risk management process21
Annex A (informative) Attributes of enhanced risk management22
Bibliography24

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INTRODUCTION
Organizations of any kind face internal and external factors and influences that make it
uncertain whether when and the extent to which they will achieve or exceed their objectives
The effect this uncertainty has on the organization’s objectives is risk
All activities of an organization involve risk Organizations manage risk by anticipating
understanding and deciding whether to modify it Throughout this process they communicate
and consult with stakeholders and monitor and review the risk and the controls that are
modifying the risk This Standard describes this systematic and logical process in detail
This is a new standard for managing risk that supersedes ASNZS 43602004 It builds upon the
processes contained in the superseded standard
While all organizations manage risk to some degree this Standard establishes a number of
principles that need to be satisfied before risk management will be effective This Standard
recommends that organizations should have a framework that integrates the process for
managing risk into the organization＇s overall governance strategy and planning management
reporting processes policies values and culture
Risk management can be applied across an entire organization to its many areas and levels as
well as to specific functions projects and activities
Although the practice of risk management has been developed over time and within many
sectors to meet diverse needs the adoption of consistent processes within a comprehensive
framework helps ensure that risk is managed effectively efficiently and coherently across an
organization The generic approach described in this Standard provides the principles and
guidelines for managing any form of risk in a systematic transparent and credible manner and
within any scope and context
The relationship between the principles for managing risk the framework in which it occurs and
the risk management process described in this Standard is shown in Figure 1
When implemented and maintained in accordance with this Standard the management of risk
enables all organizations to for example—
(a) increase the likelihood of achieving objectives
(b) encourage proactive management
(c) be aware of the need to identify and treat risk throughout the organization
(d) improve the identification of opportunities and threats
(e) achieve compatible risk management practices between organisations and nations
(f) comply with relevant legal and regulatory requirements and international norms
(g) improve financial reporting
(h) improve governance
(i) improve stakeholder confidence and trust
(j) establish a reliable basis for decision making and planning
(k) improve controls
(l) effectively allocate and use resources for risk treatment
(m) improve operational effectiveness and efficiency
(n) enhance health and safety performance as well as environmental protection
(o) improve loss prevention and incident management
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(p) minimize losses
(q) improve organizational learning and
(r) improve organizational resilience
This Standard is intended to meet the needs of a wide range of stakeholders including—
(i) those accountable for achieving objectives and therefore ensuring that risk is effectively
managed within the organization as a whole or within a specific area project or activity
(ii) those responsible for developing risk management policy within their organization
(iii) those who need to evaluate an organization effectiveness in managing risk and
(iv) developers of standards guides procedures and codes of practice that in whole or in part
set out how risk is to be managed within the specific context of these documents
Organizations with existing risk management processes can use this Standard to critically
review align and improve their existing practices Those whose risk management framework
has been based on ASNZS 43602004 will thereby benefit from the additional concepts and
practices in this Standard
In this Standard the expressions risk management and managing risk are both used In
general terms risk management refers to the architecture (principles framework and process)
for managing risks effectively and managing risk refers to applying that architecture to
particular risks

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Mandate
and
commitment (42)
Implementing
risk
management
(44)
Design of
framework
for managing risk
(43)
Continual
improvement
of the
framework
(46)
Monitoring
and review
of the
framework
(45)
Framework
(Clause 4)
a) Creates value b) Integral part of organizational processes c) Part of decision making d) Explicitly addresses uncertainty e) Systematic
structured
and timely f) Based on the best available information g) Tailored h) Takes human and cultural factors into account i) Transparent and inclusive j) Dynamic iterative and responsive to change k) Facilitates continual improvement and enhancement of the organization
Principles
(Clause 3
)
Process
(Clause 5)
Establishing the context
(53)
Risk assessment (54)
Risk identification (542)
Risk analysis (543)
Risk evaluation (544)
Risk treatment (55)
Communication and consultation (52)
Monitoring and review (56)

Figure 1 — Relationships between the risk management principles framework and process
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AUSTRALIANNEW ZEALAND STANDARD
Risk management—Principles and guidelines
INTERNATIONAL STANDARD ISO 310002009(E)

© ISO 2009 – All rights reserved 1

Risk management — Principles and guidelines
1 Scope
This International Standard provides principles and generic guidelines on risk management
This International Standard can be used by any public private or community enterprise association group or
individual Therefore this International Standard is not specific to any industry or sector
NOTE For convenience all the different users of this International Standard are referred to by the general term
organization
This International Standard can be applied throughout the life of an organization and to a wide range of
activities including strategies and decisions operations processes functions projects products services
and assets
This International Standard can be applied to any type of risk whatever its nature whether having positive or
negative consequences
Although this International Standard provides generic guidelines it is not intended to promote uniformity of risk
management across organizations The design and implementation of risk management plans and
frameworks will need to take into account the varying needs of a specific organization its particular objectives
context structure operations processes functions projects products services or assets and specific
practices employed
It is intended that this International Standard be utilized to harmonize risk management processes in existing
and future standards It provides a common approach in support of standards dealing with specific risks
andor sectors and does not replace those standards
This International Standard is not intended for the purpose of certification
2 Terms and definitions
For the purposes of this document the following terms and definitions apply
21
risk
effect of uncertainty on objectives
NOTE 1 An effect is a deviation from the expected — positive andor negative
NOTE 2 Objectives can have different aspects (such as financial health and safety and environmental goals) and can
apply at different levels (such as strategic organizationwide project product and process)
NOTE 3 Risk is often characterized by reference to potential events (217) and consequences (218) or a
combination of these
NOTE 4 Risk is often expressed in terms of a combination of the consequences of an event (including changes in
circumstances) and the associated likelihood (219) of occurrence
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NOTE 5 Uncertainty is the state even partial of deficiency of information related to understanding or knowledge of an
event its consequence or likelihood
[ISO Guide 732009 definition 11]
22
risk management
coordinated activities to direct and control an organization with regard to risk (21)
[ISO Guide 732009 definition 21]
23
risk management framework
set of components that provide the foundations and organizational arrangements for designing implementing
monitoring (228) reviewing and continually improving risk management (22) throughout the organization
NOTE 1 The foundations include the policy objectives mandate and commitment to manage risk (21)
NOTE 2 The organizational arrangements include plans relationships accountabilities resources processes and
activities
NOTE 3 The risk management framework is embedded within the organization＇s overall strategic and operational
policies and practices
[ISO Guide 732009 definition 211]
24
risk management policy
statement of the overall intentions and direction of an organization related to risk management (22)
[ISO Guide 732009 definition 212]
25
risk attitude
organization＇s approach to assess and eventually pursue retain take or turn away from risk (21)
[ISO Guide 732009 definition 3711]
26
risk management plan
scheme within the risk management framework (23) specifying the approach the management
components and resources to be applied to the management of risk (21)
NOTE 1 Management components typically include procedures practices assignment of responsibilities sequence
and timing of activities
NOTE 2 The risk management plan can be applied to a particular product process and project and part or whole of
the organization
[ISO Guide 732009 definition 213]
27
risk owner
person or entity with the accountability and authority to manage a risk (21)
[ISO Guide 732009 definition 3515]
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28
risk management process
systematic application of management policies procedures and practices to the activities of communicating
consulting establishing the context and identifying analyzing evaluating treating monitoring (228) and
reviewing risk (21)
[ISO Guide 732009 definition 31]
29
establishing the context
defining the external and internal parameters to be taken into account when managing risk and setting the
scope and risk criteria (222) for the risk management policy (24)
[ISO Guide 732009 definition 331]
210
external context
external environment in which the organization seeks to achieve its objectives
NOTE External context can include
⎯ the cultural social political legal regulatory financial technological economic natural and competitive environment
whether international national regional or local
⎯ key drivers and trends having impact on the objectives of the organization and
⎯ relationships with and perceptions and values of external stakeholders (213)
[ISO Guide 732009 definition 3311]
211
internal context
internal environment in which the organization seeks to achieve its objectives
NOTE Internal context can include
⎯ governance organizational structure roles and accountabilities
⎯ policies objectives and the strategies that are in place to achieve them
⎯ the capabilities understood in terms of resources and knowledge (eg capital time people processes systems and
technologies)
⎯ information systems information flows and decisionmaking processes (both formal and informal)
⎯ relationships with and perceptions and values of internal stakeholders
⎯ the organization＇s culture
⎯ standards guidelines and models adopted by the organization and
⎯ form and extent of contractual relationships
[ISO Guide 732009 definition 3312]
212
communication and consultation
continual and iterative processes that an organization conducts to provide share or obtain information and to
engage in dialogue with stakeholders (213) regarding the management of risk (21)
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NOTE 1 The information can relate to the existence nature form likelihood (219) significance evaluation
acceptability and treatment of the management of risk
NOTE 2 Consultation is a twoway process of informed communication between an organization and its stakeholders
on an issue prior to making a decision or determining a direction on that issue Consultation is
⎯ a process which impacts on a decision through influence rather than power and
⎯ an input to decision making not joint decision making
[ISO Guide 732009 definition 321]
213
stakeholder
person or organization that can affect be affected by or perceive themselves to be affected by a decision or
activity
NOTE A decision maker can be a stakeholder
[ISO Guide 732009 definition 3211]
214
risk assessment
overall process of risk identification (215) risk analysis (221) and risk evaluation (224)
[ISO Guide 732009 definition 341]
215
risk identification
process of finding recognizing and describing risks (21)
NOTE 1 Risk identification involves the identification of risk sources (216) events (217) their causes and their
potential consequences (218)
NOTE 2 Risk identification can involve historical data theoretical analysis informed and expert opinions and
stakeholder＇s (213) needs
[ISO Guide 732009 definition 351]
216
risk source
element which alone or in combination has the intrinsic potential to give rise to risk (21)
NOTE A risk source can be tangible or intangible
[ISO Guide 732009 definition 3512]
217
event
occurrence or change of a particular set of circumstances
NOTE 1 An event can be one or more occurrences and can have several causes
NOTE 2 An event can consist of something not happening
NOTE 3 An event can sometimes be referred to as an incident or accident
NOTE 4 An event without consequences (218) can also be referred to as a near miss incident near hit or close
call
[ISO Guide 732009 definition 3513]
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218
consequence
outcome of an event (217) affecting objectives
NOTE 1 An event can lead to a range of consequences
NOTE 2 A consequence can be certain or uncertain and can have positive or negative effects on objectives
NOTE 3 Consequences can be expressed qualitatively or quantitatively
NOTE 4 Initial consequences can escalate through knockon effects
[ISO Guide 732009 definition 3613]
219
likelihood
chance of something happening
NOTE 1 In risk management terminology the word likelihood is used to refer to the chance of something happening
whether defined measured or determined objectively or subjectively qualitatively or quantitatively and described using
general terms or mathematically (such as a probability or a frequency over a given time period)
NOTE 2 The English term likelihood does not have a direct equivalent in some languages instead the equivalent of
the term probability is often used However in English probability is often narrowly interpreted as a mathematical term
Therefore in risk management terminology likelihood is used with the intent that it should have the same broad
interpretation as the term probability has in many languages other than English
[ISO Guide 732009 definition 3611]
220
risk profile
description of any set of risks (21)
NOTE The set of risks can contain those that relate to the whole organization part of the organization or as
otherwise defined
[ISO Guide 732009 definition 3825]
221
risk analysis
process to comprehend the nature of risk (21) and to determine the level of risk (223)
NOTE 1 Risk analysis provides the basis for risk evaluation (224) and decisions about risk treatment (225)
NOTE 2 Risk analysis includes risk estimation
[ISO Guide 732009 definition 361]
222
risk criteria
terms of reference against which the significance of a risk (21) is evaluated
NOTE 1 Risk criteria are based on organizational objectives and external (210) and internal context (211)
NOTE 2 Risk criteria can be derived from standards laws policies and other requirements
[ISO Guide 732009 definition 3313]
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223
level of risk
magnitude of a risk (21) or combination of risks expressed in terms of the combination of consequences
(218) and their likelihood (219)
[ISO Guide 732009 definition 3618]
224
risk evaluation
process of comparing the results of risk analysis (221) with risk criteria (222) to determine whether the risk
(21) andor its magnitude is acceptable or tolerable
NOTE Risk evaluation assists in the decision about risk treatment (225)
[ISO Guide 732009 definition 371]
225
risk treatment
process to modify risk (21)
NOTE 1 Risk treatment can involve
⎯ avoiding the risk by deciding not to start or continue with the activity that gives rise to the risk
⎯ taking or increasing risk in order to pursue an opportunity
⎯ removing the risk source (216)
⎯ changing the likelihood (219)
⎯ changing the consequences (218)
⎯ sharing the risk with another party or parties (including contracts and risk financing) and
⎯ retaining the risk by informed decision
NOTE 2 Risk treatments that deal with negative consequences are sometimes referred to as risk mitigation risk
elimination risk prevention and risk reduction
NOTE 3 Risk treatment can create new risks or modify existing risks
[ISO Guide 732009 definition 381]
226
control
measure that is modifying risk (21)
NOTE 1 Controls include any process policy device practice or other actions which modify risk
NOTE 2 Controls may not always exert the intended or assumed modifying effect
[ISO Guide 732009 definition 3811]
227
residual risk
risk (21) remaining after risk treatment (225)
NOTE 1 Residual risk can contain unidentified risk
NOTE 2 Residual risk can also be known as retained risk
[ISO Guide 732009 definition 3816]
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228
monitoring
continual checking supervising critically observing or determining the status in order to identify change from
the performance level required or expected
NOTE Monitoring can be applied to a risk management framework (23) risk management process (28) risk
(21) or control (226)
[ISO Guide 732009 definition 3821]
229
review
activity undertaken to determine the suitability adequacy and effectiveness of the subject matter to achieve
established objectives
NOTE Review can be applied to a risk management framework (23) risk management process (28) risk (21)
or control (226)
[ISO Guide 732009 definition 3822]
3 Principles
For risk management to be effective an organization should at all levels comply with the principles below
a) Risk management creates and protects value
Risk management contributes to the demonstrable achievement of objectives and improvement of
performance in for example human health and safety security legal and regulatory compliance public
acceptance environmental protection product quality project management efficiency in operations
governance and reputation
b) Risk management is an integral part of all organizational processes
Risk management is not a standalone activity that is separate from the main activities and processes of
the organization Risk management is part of the responsibilities of management and an integral part of
all organizational processes including strategic planning and all project and change management
processes
c) Risk management is part of decision making
Risk management helps decision makers make informed choices prioritize actions and distinguish
among alternative courses of action
d) Risk management explicitly addresses uncertainty
Risk management explicitly takes account of uncertainty the nature of that uncertainty and how it can be
addressed
e) Risk management is systematic structured and timely
A systematic timely and structured approach to risk management contributes to efficiency and to
consistent comparable and reliable results
f) Risk management is based on the best available information
The inputs to the process of managing risk are based on information sources such as historical data
experience stakeholder feedback observation forecasts and expert judgement However decision
makers should inform themselves of and should take into account any limitations of the data or
modelling used or the possibility of divergence among experts
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g) Risk management is tailored
Risk management is aligned with the organization＇s external and internal context and risk profile
h) Risk management takes human and cultural factors into account
Risk management recognizes the capabilities perceptions and intentions of external and internal people
that can facilitate or hinder achievement of the organization＇s objectives
i) Risk management is transparent and inclusive
Appropriate and timely involvement of stakeholders and in particular decision makers at all levels of the
organization ensures that risk management remains relevant and uptodate Involvement also allows
stakeholders to be properly represented and to have their views taken into account in determining risk
criteria
j) Risk management is dynamic iterative and responsive to change
Risk management continually senses and responds to change As external and internal events occur
context and knowledge change monitoring and review of risks take place new risks emerge some
change and others disappear
k) Risk management facilitates continual improvement of the organization
Organizations should develop and implement strategies to improve their risk management maturity
alongside all other aspects of their organization
Annex A provides further advice for organizations wishing to manage risk more effectively
4 Framework
41 General
The success of risk management will depend on the effectiveness of the management framework providing
the foundations and arrangements that will embed it throughout the organization at all levels The framework
assists in managing risks effectively through the application of the risk management process (see Clause 5) at
varying levels and within specific contexts of the organization The framework ensures that information about
risk derived from the risk management process is adequately reported and used as a basis for decision
making and accountability at all relevant organizational levels
This clause describes the necessary components of the framework for managing risk and the way in which
they interrelate in an iterative manner as shown in Figure 2
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Mandate and commitment (42)
Design of framework for managing risk (43)
Understanding the organization and its context (431)
Establishing risk management policy (432)
Accountability (433)
Integration into organizational processes (434)
Resources (435)
Establishing internal communication and reporting
mechanisms (436)
Establishing external communication and reporting
mechanisms (437)
Implementing risk management (44)
Implementing the framework for managing
risk (441)
Implementing the risk management process
(442)
Continual improvement of the framework
(46)
Monitoring and review of the framework (45)

Figure 2 — Relationship between the components of the framework for managing risk
This framework is not intended to prescribe a management system but rather to assist the organization to
integrate risk management into its overall management system Therefore organizations should adapt the
components of the framework to their specific needs
If an organization＇s existing management practices and processes include components of risk management or
if the organization has already adopted a formal risk management process for particular types of risk or
situations then these should be critically reviewed and assessed against this International Standard including
the attributes contained in Annex A in order to determine their adequacy and effectiveness
42 Mandate and commitment
The introduction of risk management and ensuring its ongoing effectiveness require strong and sustained
commitment by management of the organization as well as strategic and rigorous planning to achieve
commitment at all levels Management should
⎯ define and endorse the risk management policy
⎯ ensure that the organization＇s culture and risk management policy are aligned
⎯ determine risk management performance indicators that align with performance indicators of the
organization
⎯ align risk management objectives with the objectives and strategies of the organization
⎯ ensure legal and regulatory compliance
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⎯ assign accountabilities and responsibilities at appropriate levels within the organization
⎯ ensure that the necessary resources are allocated to risk management
⎯ communicate the benefits of risk management to all stakeholders and
⎯ ensure that the framework for managing risk continues to remain appropriate
43 Design of framework for managing risk
431 Understanding of the organization and its context
Before starting the design and implementation of the framework for managing risk it is important to evaluate
and understand both the external and internal context of the organization since these can significantly
influence the design of the framework
Evaluating the organization＇s external context may include but is not limited to
a) the social and cultural political legal regulatory financial technological economic natural and
competitive environment whether international national regional or local
b) key drivers and trends having impact on the objectives of the organization and
c) relationships with and perceptions and values of external stakeholders
Evaluating the organization＇s internal context may include but is not limited to
⎯ governance organizational structure roles and accountabilities
⎯ policies objectives and the strategies that are in place to achieve them
⎯ capabilities understood in terms of resources and knowledge (eg capital time people processes
systems and technologies)
⎯ information systems information flows and decision making processes (both formal and informal)
⎯ relationships with and perceptions and values of internal stakeholders
⎯ the organization＇s culture
⎯ standards guidelines and models adopted by the organization and
⎯ the form and extent of contractual relationships
432 Establishing risk management policy
The risk management policy should clearly state the organization＇s objectives for and commitment to risk
management and typically addresses the following
⎯ the organization＇s rationale for managing risk
⎯ links between the organization＇s objectives and policies and the risk management policy
⎯ accountabilities and responsibilities for managing risk
⎯ the way in which conflicting interests are dealt with
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⎯ commitment to make the necessary resources available to assist those accountable and responsible for
managing risk
⎯ the way in which risk management performance will be measured and reported and
⎯ commitment to review and improve the risk management policy and framework periodically and in
response to an event or change in circumstances
The risk management policy should be communicated appropriately
433 Accountability
The organization should ensure that there is accountability authority and appropriate competence for
managing risk including implementing and maintaining the risk management process and ensuring the
adequacy effectiveness and efficiency of any controls This can be facilitated by
⎯ identifying risk owners that have the accountability and authority to manage risks
⎯ identifying who is accountable for the development implementation and maintenance of the framework
for managing risk
⎯ identifying other responsibilities of people at all levels in the organization for the risk management
process
⎯ establishing performance measurement and external andor internal reporting and escalation processes
and
⎯ ensuring appropriate levels of recognition
434 Integration into organizational processes
Risk management should be embedded in all the organization＇s practices and processes in a way that it is
relevant effective and efficient The risk management process should become part of and not separate from
those organizational processes In particular risk management should be embedded into the policy
development business and strategic planning and review and change management processes
There should be an organizationwide risk management plan to ensure that the risk management policy is
implemented and that risk management is embedded in all of the organization＇s practices and processes The
risk management plan can be integrated into other organizational plans such as a strategic plan
435 Resources
The organization should allocate appropriate resources for risk management
Consideration should be given to the following
⎯ people skills experience and competence
⎯ resources needed for each step of the risk management process
⎯ the organization＇s processes methods and tools to be used for managing risk
⎯ documented processes and procedures
⎯ information and knowledge management systems and
⎯ training programmes
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436 Establishing internal communication and reporting mechanisms
The organization should establish internal communication and reporting mechanisms in order to support and
encourage accountability and ownership of risk These mechanisms should ensure that
⎯ key components of the risk management framework and any subsequent modifications are
communicated appropriately
⎯ there is adequate internal reporting on the framework its effectiveness and the outcomes
⎯ relevant information derived from the application of risk management is available at appropriate levels
and times and
⎯ there are processes for consultation with internal stakeholders
These mechanisms should where appropriate include processes to consolidate risk information from a
variety of sources and may need to consider the sensitivity of the information
437 Establishing external communication and reporting mechanisms
The organization should develop and implement a plan as to how it will communicate with external
stakeholders This should involve
⎯ engaging appropriate external stakeholders and ensuring an effective exchange of information
⎯ external reporting to comply with legal regulatory and governance requirements
⎯ providing feedback and reporting on communication and consultation
⎯ using communication to build confidence in the organization and
⎯ communicating with stakeholders in the event of a crisis or contingency
These mechanisms should where appropriate include processes to consolidate risk information from a
variety of sources and may need to consider the sensitivity of the information
44 Implementing risk management
441 Implementing the framework for managing risk
In implementing the organization＇s framework for managing risk the organization should
⎯ define the appropriate timing and strategy for implementing the framework
⎯ apply the risk management policy and process to the organizational processes
⎯ comply with legal and regulatory requirements
⎯ ensure that decision making including the development and setting of objectives is aligned with the
outcomes of risk management processes
⎯ hold information and training sessions and
⎯ communicate and consult with stakeholders to ensure that its risk management framework remains
appropriate
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442 Implementing the risk management process
Risk management should be implemented by ensuring that the risk management process outlined in Clause 5
is applied through a risk management plan at all relevant levels and functions of the organization as part of its
practices and processes
45 Monitoring and review of the framework
In order to ensure that risk management is effective and continues to support organizational performance the
organization should
⎯ measure risk management performance against indicators which are periodically reviewed for
appropriateness
⎯ periodically measure progress against and deviation from the risk management plan
⎯ periodically review whether the risk management framework policy and plan are still appropriate given
the organizations＇ external and internal context
⎯ report on risk progress with the risk management plan and how well the risk management policy is being
followed and
⎯ review the effectiveness of the risk management framework
46 Continual improvement of the framework
Based on results of monitoring and reviews decisions should be made on how the risk management
framework policy and plan can be improved These decisions should lead to improvements in the
organization＇s management of risk and its risk management culture
5 Process
51 General
The risk management process should be
⎯ an integral part of management
⎯ embedded in the culture and practices and
⎯ tailored to the business processes of the organization
It comprises the activities described in 52 to 56 The risk management process is shown in Figure 3
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Risk assessment (54)
Communication
and
consultation
(52)
Monitoring
and
review (56)
Establishing the context (53)
Risk analysis (543)
Risk evaluation (544)
Risk treatment (55)
Risk identification (542)

Figure 3 — Risk management process
52 Communication and consultation
Communication and consultation with external and internal stakeholders should take place during all stages of
the risk management process
Therefore plans for communication and consultation should be developed at an early stage These should
address issues relating to the risk itself its causes its consequences (if known) and the measures being
taken to treat it Effective external and internal communication and consultation should take place to ensure
that those accountable for implementing the risk management process and stakeholders understand the basis
on which decisions are made and the reasons why particular actions are required
A consultative team approach may
⎯ help establish the context appropriately
⎯ ensure that the interests of stakeholders are understood and considered
⎯ help ensure that risks are adequately identified
⎯ bring different areas of expertise together for analyzing risks
⎯ ensure that different views are appropriately considered when defining risk criteria and in evaluating risks
⎯ secure endorsement and support for a treatment plan
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⎯ enhance appropriate change management during the risk management process and
⎯ develop an appropriate external and internal communication and consultation plan
Communication and consultation with stakeholders is important as they make judgements about risk based on
their perceptions of risk These perceptions can vary due to differences in values needs assumptions
concepts and concerns of stakeholders As their views can have a significant impact on the decisions made
the stakeholders＇ perceptions should be identified recorded and taken into account in the decision making
process
Communication and consultation should facilitate truthful relevant accurate and understandable exchanges
of information taking into account confidential and personal integrity aspects
53 Establishing the context
531 General
By establishing the context the organization articulates its objectives defines the external and internal
parameters to be taken into account when managing risk and sets the scope and risk criteria for the
remaining process While many of these parameters are similar to those considered in the design of the risk
management framework (see 431) when establishing the context for the risk management process they
need to be considered in greater detail and particularly how they relate to the scope of the particular risk
management process
532 Establishing the external context
The external context is the external environment in which the organization seeks to achieve its objectives
Understanding the external context is important in order to ensure that the objectives and concerns of external
stakeholders are considered when developing risk criteria It is based on the organizationwide context but
with specific details of legal and regulatory requirements stakeholder perceptions and other aspects of risks
specific to the scope of the risk management process
The external context can include but is not limited to
⎯ the social and cultural political legal regulatory financial technological economic natural and
competitive environment whether international national regional or local
⎯ key drivers and trends having impact on the objectives of the organization and
⎯ relationships with perceptions and values of external stakeholders
533 Establishing the internal context
The internal context is the internal environment in which the organization seeks to achieve its objectives
The risk management process should be aligned with the organization＇s culture processes structure and
strategy Internal context is anything within the organization that can influence the way in which an
organization will manage risk It should be established because
a) risk management takes place in the context of the objectives of the organization
b) objectives and criteria of a particular project process or activity should be considered in the light of
objectives of the organization as a whole and
c) some organizations fail to recognize opportunities to achieve their strategic project or business objectives
and this affects ongoing organizational commitment credibility trust and value
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It is necessary to understand the internal context This can include but is not limited to
⎯ governance organizational structure roles and accountabilities
⎯ policies objectives and the strategies that are in place to achieve them
⎯ capabilities understood in terms of resources and knowledge (eg capital time people processes
systems and technologies)
⎯ the relationships with and perceptions and values of internal stakeholders
⎯ the organization＇s culture
⎯ information systems information flows and decision making processes (both formal and informal)
⎯ standards guidelines and models adopted by the organization and
⎯ form and extent of contractual relationships
534 Establishing the context of the risk management process
The objectives strategies scope and parameters of the activities of the organization or those parts of the
organization where the risk management process is being applied should be established The management
of risk should be undertaken with full consideration of the need to justify the resources used in carrying out
risk management The resources required responsibilities and authorities and the records to be kept should
also be specified
The context of the risk management process will vary according to the needs of an organization It can involve
but is not limited to
⎯ defining the goals and objectives of the risk management activities
⎯ defining responsibilities for and within the risk management process
⎯ defining the scope as well as the depth and breadth of the risk management activities to be carried out
including specific inclusions and exclusions
⎯ defining the activity process function project product service or asset in terms of time and location
⎯ defining the relationships between a particular project process or activity and other projects processes or
activities of the organization
⎯ defining the risk assessment methodologies
⎯ defining the way performance and effectiveness is evaluated in the management of risk
⎯ identifying and specifying the decisions that have to be made and
⎯ identifying scoping or framing studies needed their extent and objectives and the resources required for
such studies
Attention to these and other relevant factors should help ensure that the risk management approach adopted
is appropriate to the circumstances to the organization and to the risks affecting the achievement of its
objectives
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535 Defining risk criteria
The organization should define criteria to be used to evaluate the significance of risk The criteria should
reflect the organization＇s values objectives and resources Some criteria can be imposed by or derived from
legal and regulatory requirements and other requirements to which the organization subscribes Risk criteria
should be consistent with the organization＇s risk management policy (see 432) be defined at the beginning
of any risk management process and be continually reviewed
When defining risk criteria factors to be considered should include the following
⎯ the nature and types of causes and consequences that can occur and how they will be measured
⎯ how likelihood will be defined
⎯ the timeframe(s) of the likelihood andor consequence(s)
⎯ how the level of risk is to be determined
⎯ the views of stakeholders
⎯ the level at which risk becomes acceptable or tolerable and
⎯ whether combinations of multiple risks should be taken into account and if so how and which
combinations should be considered
54 Risk assessment
541 General
Risk assessment is the overall process of risk identification risk analysis and risk evaluation
NOTE ISOIEC 31010 provides guidance on risk assessment techniques
542 Risk identification
The organization should identify sources of risk areas of impacts events (including changes in
circumstances) and their causes and their potential consequences The aim of this step is to generate a
comprehensive list of risks based on those events that might create enhance prevent degrade accelerate or
delay the achievement of objectives It is important to identify the risks associated with not pursuing an
opportunity Comprehensive identification is critical because a risk that is not identified at this stage will not be
included in further analysis
Identification should include risks whether or not their source is under the control of the organization even
though the risk source or cause may not be evident Risk identification should include examination of the
knockon effects of particular consequences including cascade and cumulative effects It should also
consider a wide range of consequences even if the risk source or cause may not be evident As well as
identifying what might happen it is necessary to consider possible causes and scenarios that show what
consequences can occur All significant causes and consequences should be considered
The organization should apply risk identification tools and techniques that are suited to its objectives and
capabilities and to the risks faced Relevant and uptodate information is important in identifying risks This
should include appropriate background information where possible People with appropriate knowledge should
be involved in identifying risks
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543 Risk analysis
Risk analysis involves developing an understanding of the risk Risk analysis provides an input to risk
evaluation and to decisions on whether risks need to be treated and on the most appropriate risk treatment
strategies and methods Risk analysis can also provide an input into making decisions where choices must be
made and the options involve different types and levels of risk
Risk analysis involves consideration of the causes and sources of risk their positive and negative
consequences and the likelihood that those consequences can occur Factors that affect consequences and
likelihood should be identified Risk is analyzed by determining consequences and their likelihood and other
attributes of the risk An event can have multiple consequences and can affect multiple objectives Existing
controls and their effectiveness and efficiency should also be taken into account
The way in which consequences and likelihood are expressed and the way in which they are combined to
determine a level of risk should reflect the type of risk the information available and the purpose for which the
risk assessment output is to be used These should all be consistent with the risk criteria It is also important
to consider the interdependence of different risks and their sources
The confidence in determination of the level of risk and its sensitivity to preconditions and assumptions should
be considered in the analysis and communicated effectively to decision makers and as appropriate other
stakeholders Factors such as divergence of opinion among experts uncertainty availability quality quantity
and ongoing relevance of information or limitations on modelling should be stated and can be highlighted
Risk analysis can be undertaken with varying degrees of detail depending on the risk the purpose of the
analysis and the information data and resources available Analysis can be qualitative semiquantitative or
quantitative or a combination of these depending on the circumstances
Consequences and their likelihood can be determined by modelling the outcomes of an event or set of events
or by extrapolation from experimental studies or from available data Consequences can be expressed in
terms of tangible and intangible impacts In some cases more than one numerical value or descriptor is
required to specify consequences and their likelihood for different times places groups or situations
544 Risk evaluation
The purpose of risk evaluation is to assist in making decisions based on the outcomes of risk analysis about
which risks need treatment and the priority for treatment implementation
Risk evaluation involves comparing the level of risk found during the analysis process with risk criteria
established when the context was considered Based on this comparison the need for treatment can be
considered
Decisions should take account of the wider context of the risk and include consideration of the tolerance of the
risks borne by parties other than the organization that benefits from the risk Decisions should be made in
accordance with legal regulatory and other requirements
In some circumstances the risk evaluation can lead to a decision to undertake further analysis The risk
evaluation can also lead to a decision not to treat the risk in any way other than maintaining existing controls
This decision will be influenced by the organization＇s risk attitude and the risk criteria that have been
established
55 Risk treatment
551 General
Risk treatment involves selecting one or more options for modifying risks and implementing those options
Once implemented treatments provide or modify the controls
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Risk treatment involves a cyclical process of
⎯ assessing a risk treatment
⎯ deciding whether residual risk levels are tolerable
⎯ if not tolerable generating a new risk treatment and
⎯ assessing the effectiveness of that treatment
Risk treatment options are not necessarily mutually exclusive or appropriate in all circumstances The options
can include the following
a) avoiding the risk by deciding not to start or continue with the activity that gives rise to the risk
b) taking or increasing the risk in order to pursue an opportunity
c) removing the risk source
d) changing the likelihood
e) changing the consequences
f) sharing the risk with another party or parties (including contracts and risk financing) and
g) retaining the risk by informed decision
552 Selection of risk treatment options
Selecting the most appropriate risk treatment option involves balancing the costs and efforts of
implementation against the benefits derived with regard to legal regulatory and other requirements such as
social responsibility and the protection of the natural environment Decisions should also take into account
risks which can warrant risk treatment that is not justifiable on economic grounds eg severe (high negative
consequence) but rare (low likelihood) risks
A number of treatment options can be considered and applied either individually or in combination The
organization can normally benefit from the adoption of a combination of treatment options
When selecting risk treatment options the organization should consider the values and perceptions of
stakeholders and the most appropriate ways to communicate with them Where risk treatment options can
impact on risk elsewhere in the organization or with stakeholders these should be involved in the decision
Though equally effective some risk treatments can be more acceptable to some stakeholders than to others
The treatment plan should clearly identify the priority order in which individual risk treatments should be
implemented
Risk treatment itself can introduce risks A significant risk can be the failure or ineffectiveness of the risk
treatment measures Monitoring needs to be an integral part of the risk treatment plan to give assurance that
the measures remain effective
Risk treatment can also introduce secondary risks that need to be assessed treated monitored and reviewed
These secondary risks should be incorporated into the same treatment plan as the original risk and not treated
as a new risk The link between the two risks should be identified and maintained
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553 Preparing and implementing risk treatment plans
The purpose of risk treatment plans is to document how the chosen treatment options will be implemented
The information provided in treatment plans should include
⎯ the reasons for selection of treatment options including expected benefits to be gained
⎯ those who are accountable for approving the plan and those responsible for implementing the plan
⎯ proposed actions
⎯ resource requirements including contingencies
⎯ performance measures and constraints
⎯ reporting and monitoring requirements and
⎯ timing and schedule
Treatment plans should be integrated with the management processes of the organization and discussed with
appropriate stakeholders
Decision makers and other stakeholders should be aware of the nature and extent of the residual risk after
risk treatment The residual risk should be documented and subjected to monitoring review and where
appropriate further treatment
56 Monitoring and review
Both monitoring and review should be a planned part of the risk management process and involve regular
checking or surveillance It can be periodic or ad hoc
Responsibilities for monitoring and review should be clearly defined
The organization＇s monitoring and review processes should encompass all aspects of the risk management
process for the purposes of
⎯ ensuring that controls are effective and efficient in both design and operation
⎯ obtaining further information to improve risk assessment
⎯ analyzing and learning lessons from events (including nearmisses) changes trends successes and
failures
⎯ detecting changes in the external and internal context including changes to risk criteria and the risk itself
which can require revision of risk treatments and priorities and
⎯ identifying emerging risks
Progress in implementing risk treatment plans provides a performance measure The results can be
incorporated into the organization＇s overall performance management measurement and external and internal
reporting activities
The results of monitoring and review should be recorded and externally and internally reported as appropriate
and should also be used as an input to the review of the risk management framework (see 45)
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57 Recording the risk management process
Risk management activities should be traceable In the risk management process records provide the
foundation for improvement in methods and tools as well as in the overall process
Decisions concerning the creation of records should take into account
⎯ the organization＇s needs for continuous learning
⎯ benefits of reusing information for management purposes
⎯ costs and efforts involved in creating and maintaining records
⎯ legal regulatory and operational needs for records
⎯ method of access ease of retrievability and storage media
⎯ retention period and
⎯ sensitivity of information
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Annex A
(informative)

Attributes of enhanced risk management
A1 General
All organizations should aim at the appropriate level of performance of their risk management framework in
line with the criticality of the decisions that are to be made The list of attributes below represents a high level
of performance in managing risk To assist organizations in measuring their own performance against these
criteria some tangible indicators are given for each attribute
A2 Key outcomes
A21 The organization has a current correct and comprehensive understanding of its risks
A22 The organization＇s risks are within its risk criteria
A3 Attributes
A31 Continual improvement
An emphasis is placed on continual improvement in risk management through the setting of organizational
performance goals measurement review and the subsequent modification of processes systems resources
capability and skills
This can be indicated by the existence of explicit performance goals against which the organization＇s and
individual manager＇s performance is measured The organization＇s performance can be published and
communicated Normally there will be at least an annual review of performance and then a revision of
processes and the setting of revised performance objectives for the following period
This risk management performance assessment is an integral part of the overall organization＇s performance
assessment and measurement system for departments and individuals
A32 Full accountability for risks
Enhanced risk management includes comprehensive fully defined and fully accepted accountability for risks
controls and risk treatment tasks Designated individuals fully accept accountability are appropriately skilled
and have adequate resources to check controls monitor risks improve controls and communicate effectively
about risks and their management to external and internal stakeholders
This can be indicated by all members of an organization being fully aware of the risks controls and tasks for
which they are accountable Normally this will be recorded in jobposition descriptions databases or
information systems The definition of risk management roles accountabilities and responsibilities should be
part of all the organization＇s induction programmes
The organization ensures that those who are accountable are equipped to fulfil that role by providing them
with the authority time training resources and skills sufficient to assume their accountabilities
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A33 Application of risk management in all decision making
All decision making within the organization whatever the level of importance and significance involves the
explicit consideration of risks and the application of risk management to some appropriate degree
This can be indicated by records of meetings and decisions to show that explicit discussions on risks took
place In addition it should be possible to see that all components of risk management are represented within
key processes for decision making in the organization eg for decisions on the allocation of capital on major
projects and on restructuring and organizational changes For these reasons soundly based risk
management is seen within the organization as providing the basis for effective governance
A34 Continual communications
Enhanced risk management includes continual communications with external and internal stakeholders
including comprehensive and frequent reporting of risk management performance as part of good
governance
This can be indicated by communication with stakeholders as an integral and essential component of risk
management Communication is rightly seen as a twoway process such that properly informed decisions can
be made about the level of risks and the need for risk treatment against properly established and
comprehensive risk criteria
Comprehensive and frequent external and internal reporting on both significant risks and on risk management
performance contributes substantially to effective governance within an organization
A35 Full integration in the organization＇s governance structure
Risk management is viewed as central to the organization＇s management processes such that risks are
considered in terms of effect of uncertainty on objectives The governance structure and process are based on
the management of risk Effective risk management is regarded by managers as essential for the achievement
of the organization＇s objectives
This is indicated by managers＇ language and important written materials in the organization using the term
uncertainty in connection with risks This attribute is also normally reflected in the organization＇s statements
of policy particularly those relating to risk management Normally this attribute would be verified through
interviews with managers and through the evidence of their actions and statements
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Bibliography
[1] ISO Guide 732009 Risk management — Vocabulary
[2] ISOIEC 31010 Risk management — Risk assessment techniques


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NOTES
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NOTES
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Standards Australia
Standards Australia is an independent company limited by guarantee which prepares and publishes
most of the voluntary technical and commercial standards used in Australia These standards are
developed through an open process of consultation and consensus in which all interested parties are
invited to participate Through a Memorandum of Understanding with the Commonwealth
government Standards Australia is recognized as Australia’s peak national standards body
Standards New Zealand
The first national Standards organization was created in New Zealand in 1932 The Standards
Council of New Zealand is the national authority responsible for the production of Standards
Standards New Zealand is the trading arm of the Standards Council established under the Standards
Act 1988
AustralianNew Zealand Standards
Under a Memorandum of Understanding between Standards Australia and Standards New Zealand
AustralianNew Zealand Standards are prepared by committees of experts from industry
governments consumers and other sectors The requirements or recommendations contained
in published Standards are a consensus of the views of representative interests and also take
account of comments received from other sources They reflect the latest scientific and industry
experience AustralianNew Zealand Standards are kept under continuous review after publication
and are updated regularly to take account of changing technology
International Involvement
Standards Australia and Standards New Zealand are responsible for ensuring that the Australian
and New Zealand viewpoints are considered in the formulation of international Standards and that
the latest international experience is incorporated in national and Joint Standards This role is vital
in assisting local industry to compete in international markets Both organizations are the national
members of ISO (the International Organization for Standardization) and IEC (the International
Electrotechnical Commission)
Visit our web sites
wwwstandardsorgau wwwstandardsconz
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