Fundamental concepts from the ISO 31000 framework:

Risk: The effect of uncertainty on objectives, either positive or negative.

Example: A new technology could improve efficiency (positive) or disrupt operations if implementation fails (negative).

Risk Management: Coordinated activities to direct and control an organization regarding risk.

Risk Appetite: The amount of risk an organization is willing to take to achieve objectives.

Example: A tech startup might have a higher risk appetite compared to a healthcare company.

Risk Tolerance: The acceptable level of variation in outcomes.

Example: A manufacturer may tolerate minor delays but not defective products.

Risk Identification: The process of finding, recognizing, and describing risks.

Example: Identifying potential cybersecurity threats in an e-commerce platform.

Risk Assessment: The overall process of risk identification, risk analysis, and risk evaluation.

Risk Analysis: Understanding the nature, sources, and potential impacts of identified risks.

Risk Evaluation: Comparing risk analysis results with risk criteria to prioritize risks.

Risk Criteria: Standards used to judge risk significance.

Example: Criteria might include financial impact, legal implications, or reputational damage.

Risk Treatment: Developing and implementing measures to manage risks.

Risk Avoidance: Not engaging in activities that carry unacceptable risks.

Example: Avoiding markets with volatile regulations to prevent compliance risks.

Risk Reduction: Implementing actions to reduce the likelihood or impact of risks.

Example: Installing fire alarms to reduce the impact of a potential fire.

Risk Sharing: Distributing risk with other parties, like insurers.

Example: Buying insurance to share the financial burden of natural disasters.

Risk Retention: Accepting the risk and preparing for potential impacts.

Example: Setting aside a reserve fund for minor IT disruptions.

Residual Risk: The remaining risk after treatment measures are applied.

Risk Owner: The person or entity accountable for managing a particular risk.

Example: The head of IT might own cybersecurity risks.

Stakeholder Engagement: Involving those affected by risks in the risk management process.

Risk Communication: Sharing risk-related information to foster awareness and response.

Risk Culture: Organizational values, beliefs, and behaviors regarding risk management.

Risk Management Framework: Structured set of guidelines for managing risks across the organization.

Risk Management Policy: Documented commitment and approach to managing risk.

Continuous Improvement: Ongoing enhancement of the risk management process.

Context Establishment: Defining internal and external contexts before risk assessment.

Internal Context: Conditions within the organization, like culture, governance, and resources.

External Context: External factors, including industry trends, legal requirements, and competition.

Risk Profile: Comprehensive view of the organization's risk landscape.

Risk Register: A log that captures all identified risks, their assessments, and treatment plans.

Risk Response: Actions taken to address a specific risk.

Example: Developing a cybersecurity incident response plan.

Likelihood: The chance of a risk occurring.

Example: Likelihood of power outage impacting operations in an area with frequent storms.

Consequence: The impact of a risk event on objectives.

Example: A data breach could lead to regulatory fines and reputation loss.

Controls: Measures that reduce risk likelihood or impact.

Example: Firewall installation to mitigate cybersecurity risks.

Control Effectiveness: Assessment of how well a control reduces risk.

Risk Maturity: The level of sophistication in an organization’s risk management practices.

Scenario Analysis: Exploring potential outcomes under various risk scenarios.

Example: Examining impacts of supply chain disruptions in a natural disaster.

Risk Aggregation: Combining risks to see the total impact on the organization.

Key Risk Indicators (KRIs): Metrics to monitor risk levels.

Example: Tracking absenteeism as a KRI for potential labor issues.

Business Continuity Planning: Ensuring critical functions remain operational during crises.

Crisis Management: Responding to significant, disruptive events to minimize damage.

Monitoring and Review: Regularly tracking and assessing risks and controls.

Compliance Risk: Risks related to violations of laws and regulations.

Reputational Risk: Risks that could damage the organization’s brand or reputation.

Example: Product recalls affecting customer trust.

Financial Risk: Risks impacting financial stability.

Example: Foreign exchange rate fluctuations for international businesses.

Operational Risk: Risks from daily business activities.

Example: Machine breakdown in a manufacturing facility.

Strategic Risk: Risks that affect long-term objectives.

Example: Losing competitive advantage due to outdated technology.

Environmental Risk: Risks related to environmental factors or regulations.

Example: Penalties for emissions non-compliance in manufacturing.

Risk-Based Decision Making: Prioritizing actions based on risk assessments.

Risk Attitude: The organization’s general approach to risk (e.g., risk-averse vs. risk-seeking).

Risk Capacity: The maximum level of risk the organization can bear.

Risk Velocity: How quickly a risk can impact the organization.

Risk Escalation: The process of raising awareness about critical risks up the management chain.