Friday, September 7, 2007

Australian Standard AS/NZS 4360 Risk Management

Anyone looking for a comprehensive standard for risk management should look to Australian Standard AS/NZS 4360 Risk Management. I have looked at just about everything out there in the standards space and find this standard to be the most useful and usable. What I especially like about it is that it takes a broader view of risk, looking at the opportunity side of the equation in addition to the more negative risk-of-adverse-event side.

From the forward to 4360:
Risk management involves managing to achieve an appropriate
balance between realizing opportunities for gains while
minimizing losses. It is an integral part of good management
practice and an essential element of good corporate governance.
It is an iterative process consisting of steps that, when
undertaken in sequence, enable continuous improvement in
decision-making and facilitate continuous improvement in

Risk management involves establishing an appropriate
infrastructure and culture and applying a logical and systematic
method of establishing the context, identifying, analysing,
evaluating, treating, monitoring and communicating risks
associated with any activity, function or process in a way that
will enable organizations to minimize losses and maximize

To be most effective, risk management should become part of an
organization's culture. It should be embedded into the
organization's philosophy, practices and business processes
rather than be viewed or practiced as a separate activity. When
this is achieved, everyone in the organization becomes involved
in the management of risk.

Although the concept of risk is often interpreted in terms of
hazards or negative impacts, this Standard is concerned with risk
as exposure to the consequences of uncertainty, or potential
deviations from what is planned or expected. The process
described here applies to the management of both potential gains
and potential losses.

Organizations that manage risk effectively and efficiently are
more likely to achieve their objectives and do so at lower overall

The Standard is available for purchase alone or with a very useful implementation guide titled HB436 Risk Management Guidelines - Companion to AS/NZS 4360. Both publications are highly recommended.

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