Fundamentals of Risk Management

Approaches to risk management 
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management is lost. Risk management activities need to be linked to discussion of 
strategy, tactics and operations, as well as being linked to discussion of business
delivery, budgets and the business development model.
The publication of ISO 31000 in 2009 opens the possibility that there may be 
international standardization of risk management standards in due course. British 
Standard BS 31100 was originally published in 2008, but was updated in 2011 to 
provide greater alignment with ISO 31000. BS 31100 provides greater detail on the 
risk management framework than ISO 31000 and is a useful addition to the available 
risk management standards and frameworks.
Management initiatives often come and go. A particular approach becomes
fashionable for a while and then fades away. It is unlikely that this will happen to 
risk management, because the requirement to have risk management procedures
in place has become mandatory in many sectors. Also, the global financial crisis
has resulted in a detailed analysis of the benefits that risk management can bring
and how these can be achieved. The brief commentary below illustrates how risk 
management is valued around the world and why it is here to stay.
Every day, managers and employees practise risk management by making decisions on what 
to do, and how and when to do it. Decisions have to be based on factors like does the 
organization have the capacity, has the organization set aside the funds and will this impact 
other business units.
ERM is not just a passing trend. It is here to stay and is being driven by both governance 
issues and the demands of society. Companies, charities and public-sector organizations 
have successfully embraced ERM.
Risk management does not have to be complex or a heavy resource user. It can be 
tailored to meet the needs of the organization in its early stages and modified as the level of 
sophistication and comfort with the process grows. It is a systematic and proactive approach 
to managing risk. This means that high-risk exposure areas are understood, managed and 
controlled to an acceptable level of exposure so that the organization is properly protected to 
minimize negative consequences. It allows the organization to focus on what is important to 
control versus what is easy to control.
risk management is here to stay

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