Page 18 - RMAI July-September 2018

July - September 2018

The demystification of risk involves a new whole withdrawn in 2009 in preference for ISO 3100. SA
perspective on a business-wide process that has been 4360 was first published in 1995 and ISO 3100
looked at for many years as a separable, quantitative includes many of the features previously described in
and work specific exercise. AS 4360.
The quantification comes from the attempt to BENEFITS OF RISK MANAGEMENT
replicate scientific, mathematical models of
There is a range of benefits arising from successful
probability but most activities do not need such rigor.
implementation of risk management. A key benefit is
The issue of risk management is simple comprising to enhance the efficiency of operations within the
awareness of risks and focused and intense
organization. Risk management helps ensure that
management.
business processes (including process experiments by
Setting up for risk management means preparing the way of projects and other change initiatives) are
organization and not the work activities first. The effective and that the selected strategy is efficacious.
issue is establishing first the value of risk analysis as The outputs from risk management activities can
part of the normal planning process. Finding out benefit organization in three time scales and ensure
where risks emerge from that make inroads into the that the organization achieves:
work breakdown structure and scheduling process. # efficacious strategy; # effective process; # efficient
We have to bear in mind risk is an input to risk-based operations.
scheduling. Dimensioning risk is qualitative, ranking
and ordering, usually not quantitative. In order to achieve a successful risk management
contribution, the intended benefits of any risk
The risk management process is fairly well management initiatives have to be identified, listed
established, although it may be carried out in a and prioritized. If those benefits have not been
number of different ways. But the process cannot identified, there may be no means of evaluating

take place in isolation. It needs to be supported by a whether the risk management initiative has been
framework within the organization and further needs successful at all.
to be implemented in different ways appropriate to
Therefore, good risk management has to have a clear
the situation in the range of standards, guides and set of desired indisputable set of outcomes/benefits.
other publications that are available. Appropriate attention has to be paid to each stage of
The key components of a successful risk management risk management process, as well as to details of the
framework are the structure which is comprised of design, implementation and monitoring of the
the communications and reporting system, the framework that supports these risk management
strategy that is set up by the organization and the set activities. One of the major requirements for a good
lawyer is to be up-to-date with case law. Most
of guidelines and procedures and protocols that have
judgements delivered by Superior Courts in India are
been established. The combination of risk
by the State High Courts and the Supreme Court. As a
management process together with the description
matter of fact many a case is won in Superior Courts
in place for supporting the process constitutes the
by the citation of Case Law And many a precedent is
“risk management standard”.
cited by case law.
There are standards in existence, including the
FEATURE OF RISK MANAGEMENT
Institute of Risk Management (IRM) Standard and the
Failure to adequately manage risks which
recently published British Standard (BS) 31100. There
organizations quite often face can be caused by
is also American COSO ERM framework.
inadequate risk recognition, insufficient analysis of
The latest addition to the available risk management significant risks which need consideration and failure
standard is the International Standard (ISO) 31000 to identify suitable risk responsive activities. Also,
published in 2009. The well-established and highly failure to set a risk management strategy and
regarded Australian Standard (AS) 2004 was communicate that strategy and the associated

RISK MANAGEMENT ASSOCIATION OF INDIA 17