Risk management studies are the studies conducted to identify and evaluate the risks that will arise during the activities of the companies in detail and carefully and to take necessary measures to minimize or completely eliminate these risks.
Firms need to be aware of the dangers and uncertainties that may interfere with their objectives, whether they are operating in the financial field or not, to identify, analyze and evaluate their potential impacts. Risk management activities are carried out for this purpose. In the context of risk management, the companies take precautions against various dangers and uncertainties and prepare plans to eliminate the risk. Firms need to be able to manage all risks to achieve their goals, otherwise they are unpredictable labor, time and material losses may cause.
There are an unlimited number of risk types that firms may face depending on their field of activity. These risks vary from company to company and may include credit risk, market risk, reputation risk, legal risk, environmental risk, occupational accident risk, occupational disease risk, operational risk and many other risks. Although it is not possible to eliminate some risks altogether, it is possible to at least minimize the effects of these risks. This can only be achieved by risk management.
The cost of the work to be performed during risk management will be much lower than the cost of expenditures to eliminate the effects when the risk occurs.
Risk Management Studies Require Correct Planning
Risk management is a process that involves identifying, controlling, eliminating or minimizing hazards. This process consists of certain steps such as risk analysis, benefit cost analysis, decision making, implementation, testing and security assessment. These steps should be carried out under a plan. Risks are a variable that depends on different factors and are under the influence of these variables. Identified risks need to be addressed separately, their likelihood of occurrence and their degree of impact identified. Risk dimensions should be calculated and the measures to be taken should be determined. When determining risks, all assets of the firm should be considered. The threats to which each asset may be identified must be identified. If any measures have already been taken, it should be determined whether they are applicable and sufficient.
In the light of all the findings, the threats and risks that the assets are exposed to, the extent to which they are at risk, which measures are needed and how much protection can be provided by these measures are evaluated.
What Does the ISO 31000 Risk Management System Standard Provide?
From time to time, on the one hand, global and on the other hand, national or frequent economic or political crises are experienced. Therefore, companies have to control their risks and manage them systematically in order to secure and maintain their assets. On the other hand, companies must not lag behind in the struggle with their competitors. The biggest problem of companies today is that they have to maintain their sustainable competitiveness. The uncertainties experienced create risks for the companies to achieve their targets and companies try to cope with these risks. In case of successful risk management practices, there is always the possibility that uncertainties can be turned into opportunities.
Based on these needs, the International Standards Organization 2009 issued the ISO 31000 Risk Management standard. This standard specifies the criteria and application principles for companies to manage their risks.
Firms that apply ISO 31000 standard in their enterprises provide data-based information, analyze, evaluate and take precautions to prevent possible risks or reduce the effects of unavoidable risks. With this standard, risks and their possible effects on the company are determined, risk factors or risk factors are revealed and information flow is provided to managers in decision making.
In short, with the establishment and implementation of ISO 31000 Risk Management System, an acceptable assurance is provided for companies to achieve their targets, operational risks are systematically evaluated and thus, the effects of possible losses are minimized. The most important point here is to see that risks can sometimes create new opportunities and move in this direction.
ISO 31000 Risk Management System Certificate
The ISO 31000 standard can be applied to any company, regardless of how large or large the firm is in the public or private sector. Regardless of the type of activity, all companies face certain risks during their operations. It is natural to control these risks and try to protect them from possible damages. The ISO 31000 standard allows this systematic work to be carried out within certain rules. Therefore, if the company managers believe in the necessity and importance of risk management, if they believe that assessing the risks and identifying the possible effects will be beneficial, they may establish an ISO 31000 Enterprise Risk Management System in that company and apply for an ISO 31000 Certificate by applying to a certification body.
Implementing ISO 31000 standard has many benefits for companies. Here are a few of them:
• Awareness among employees about risks and their effects
• A sense of responsibility is created among employees of all levels
• Possible risks are managed with a preventive approach
• Manage business processes more effectively
• Company resources are used more effectively
• Increases reputation and brand value
• Company outperforms competitors in the same lane
The new management approach is based on the principles of making things right the first time and taking precautions before possible mistakes occur. The risk management approach is very relevant to the implementation of this second principle. It is useful to apply ISO 31000 standard in order to make quick and effective decisions, to avoid surprises, to minimize possible losses, to avoid labor, time and material losses in production, to prevent waste of resources and to keep risks at reasonable levels. However, in order to obtain these benefits, the senior management must own the system and actively participate in the works to be carried out.
What is the scope of ISO 31000 Risk Management System?
The general approach of ISO 31000 Risk Management System standard is to determine the main principles and principles in risk management. When applying the ISO 31000 standard, companies must address the company's goals, needs and principles together.
The general framework of ISO 31000 Risk Management System is explained in the fourth article. In this article, general rules, orders and adherence, risk management design, risk management policy, responsibility, integration with existing business processes, resources, communication and reporting mechanisms, the implementation of the risk management process, monitoring, review and continuous improvement of the system It is located.
The fifth article of the ISO 31000 standard is titled processes. This article contains a description of the risk management process, risk criteria, identification, analysis and evaluation of risks, risk processing options and risk management.
There is also an annex describing the characteristics of advanced risk management.
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