Risk Management for directors: A Guide
What is risk and risk management?
Risk-taking is what organisations do — it is part of every decision an organisation takes. Risk management standard ISO 31000 2018 defines risk as ‘the effect of uncertainty on objectives’ and risk management as ‘coordinated activities to direct and control an organisation with regard to risk’.3 Risk encompasses the opportunities to create value for the organisation (upside or opportunity risk) as well as the threats or hazards present and to be considered to ensure value is not compromised (downside risk), with recognition of the uncertainties attached to the opportunities and hazards alike. Organisations that manage risk well can limit the impact of threats and take advantage of opportunities.
Risk management is critical as it assists organisations in setting strategy, achieving objectives, making informed decisions and potentially avoiding loss events. It also protects customers and vulnerable stakeholders from harmful impacts, such as those investigated by the royal commissions into the financial services and aged care sectors.
The original edition of the guide was published as Risk Management: A handbook for directors in 2016. This revised edition is published in 2022.