Risk management is one of the most important factors to consider in the financial industry.
In a recent post by Ideagen, the company outlined the principles of risk management as well as underlining details of the ISO 31000 standard which help companies establish risk management practices.
Ideagen said, “Following principles of risk management can help your organisation manage risk in the best possible way. This is important to ensure that your organisation is protected from the various threats that it may face. It’s also important because, if done well, risk management can create opportunities for your business.”
The company outlined details of the ISO 31000 standard, which provides useful guidelines for managing risk, with a key way it does this is through the ISO 31000 risk management principles.
According to Ideagen, the ISO 31000 risk management principles aim to help your organisation improve how it manages risk so that you can create and protect value in your organisation.
There are eight principles of risk management that are outlined in the international standard. The first is integrated, so as to ensure that all of an organisation’s activities make risk management a focus, while the second focuses in being structured and comprehensive. Other principles are that risk management should be customised, inclusive and dynamic.
In addition, the best available information should be a principle – with a robust risk management process relying on past and present data as well as anticipation for the future and the limitations and uncertainties surrounding that information. Another principle is human and cultural factors – including an organisation’s capabilities and stakeholder objectives. Lastly, continual improvement is vital.
Ideagen said, “When principles of risk management are not followed, risk is often approached in a disorganised manner that can have spiralling consequences. For example, if a manufacturer does not check the quality of materials from a supplier, they risk creating a sub-standard product. This could then lead to recalls, replacements, refunds, machine downtime, delay in re-supply, and ongoing costs to reputation.”
Read the full post here.
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