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Insight to Risk

A Free Risk Management Newsletter

September 2009
Issue 16

ISO 31000 Risk Treatment







































Risk management - it’s everywhere!

Risk management certainly seems to be the flavour of the decade. In the past month there have been several mentions in areas that only a while ago would have seemed quite unusual. Here are just three;

  • A US Community College is hosting free workshops on risk management for dairy farmers
  • Doctors specialising in Obsessive Compulsive Disorder (OCD) have been talking risk management (probably the risk of getting treatments wrong!)
  • Dr. Richard p. Borkowski, EdD, CMAA has written a book on Coaching for Safety, A risk Management Handbook for High School Coaches, published by ESD112.

King III Report

I have not managed to do the promised review of the King III Report risk management chapter. That should be ready for the next issue.

Now for the final part of the summary of ISO 31000:

ISO 31000 – Risk Treatment

Improving on the present position: - The risk treatment section of the standard assumes that the existing controls have already been dealt with in the assessment stage. In the analysis and evaluation of a risk, the effectiveness of controls already in place will have had an influence in determining the severity and likelihood of possible consequences. Treatment deals with the further actions that are necessary to bring the risk to the desired level of tolerance, which may of course involve improving currently ineffective controls. Keep in mind that risk management is an iterative or a cyclical process. You should be continually reviewing the risks and controls.

Selecting from options: - There are always options when it comes to treatment, so it is necessary to assess their potential effectiveness and weigh the cost or difficulty against the benefits before making a decision, always having due regard for any legal, regulatory and social responsibility considerations. The options can include avoidance, eliminating the source, reducing the likelihood or consequences, passing all of the risk onto another party or sharing it. Sometimes it could be decided to actually increase the risk because of the attractiveness of the rewards.

Possible side effects: - Treatments involve change and the principles of change management need to be considered. A new treatment could create another risk downstream or in another part of the complex, or even in an unrelated entity. These aspects need to be thought through and assessed in turn.

Treatment Plans: - The Standard stresses the need for thorough documentation and communication with respect to risk treatment. It is important to record the reason for a chosen treatment and the expected benefits, especially the change in the residual risk. It is not uncommon, when a treatment has been working effectively for some time, that people forget its importance and allow it to slide.

The final two sections of the Standard deal with Monitoring and Review and Recording. There is little here that is not covered in basic management principles but an aspect that is often overlooked when it comes to risk management is the need for effective performance measurement. It is vital to establish performance criteria for the framework and process application as well as for risk reduction and to incorporate these in the organisation’s overall performance management system.

Also of importance is that any changes in the internal or external environment should trigger a review of risk assessments and controls. Risks can easily increase or decrease or controls become ineffective when government, industry or the company makes a change or if a natural event occurs or there is a market shift.

Be sure to write in if you have any questions or comments on the Standard. I will respond to all messages personally.

Distance Consulting Services

The offer is still open for distance reviews or development of risk management frameworks, as well as an economical product for small business owners.

Best wishes

Steve Winks

Quote of the month: "The problems that exist in the world cannot be solved by the level of thinking that created them."
Albert Einstein

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