RISK MANAGEMENT GUIDELINES - SAIGlobal

1 HB 436:2004. RISK MANAGEMENT . GUIDELINES . Companion to AS/NZS 4360:2004. This is a free 10 page sample. Access the full version online. HB 436:2004. (Incorporating Amendment No. 1). Handbook Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004. Originated as HB 142 1999 and HB 143:1999. Jointly revised and redesignated as HB 436:2004. Reissued incorporating Amendment No. 1 (December 2005). This is a free 10 page sample. Access the full version online. COPYRIGHT. Standards Australia/Standards New Zealand All rights are reserved. No part of this work may be reproduced or copied in any form or by any means, electronic or mechanical, including photocopying, without the written permission of the publisher.

2 Jointly published by Standards Australia International Ltd, GPO Box 5420, Sydney, NSW 2001. and Standards New Zealand, Private Bag 2439, Wellington 6020. ISBN 0 7337 5960 2. Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004. Preface This Handbook provides generic guidance for establishing and implementing effective risk MANAGEMENT processes in any organization. It demonstrates how to establish the proper context, and then how to identify, analyse, evaluate, treat, communicate and monitor risks . This Standard incorporates Amendment No. 1 (December 2005). The changes required by the Amendment are indicated in the text by a marginal bar and amendment number against the clause, note, table, figure or part thereof affected.

3 This Handbook is based on the Joint Australian/New Zealand Standard, AS/NZS 4360:2004, Risk MANAGEMENT (the Standard). Each Section contains an extract from the Standard, followed by practical advice and relevant examples. This basic guide provides a generic framework for managing risk. It may be applied in a very wide range of organizations including: public sector entities at national, regional and local levels;. commercial enterprises, including companies, joint ventures, firms and franchises;. partnerships and sole practices;. non-government organizations; and voluntary organizations such as charities, social groupings and sporting clubs.

4 It provides a reference for directors, elected officials, chief executive officers, senior executives, line managers and staff when developing processes, systems and techniques for managing risk that are appropriate to the context of their organization or their roles. This is a free 10 page sample. Access the full version online. The contents are intended to provide only a broad overview of risk MANAGEMENT . Organizations are expected to interpret this guide in the context of their own environments and to develop their own specific risk MANAGEMENT approaches. Ultimately it is up to the risk makers and the risk takers to develop and manage their own risk MANAGEMENT programmes.

5 Attributions Standards Australia International acknowledges, with thanks, the contribution of the following organizations in the development of this Handbook: Australian Computer Society Australian Customs Service Australia New Zealand Institute of Insurance and Finance ii Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004. CSIRO (Commonwealth Scientific and Industrial Research Organisation). Department of Defence (Australia). Department of Finance and Administration Emergency MANAGEMENT Australia Environmental Risk MANAGEMENT Authority (New Zealand). Institute of Chartered Accountants (Australia). Institution of Engineers Australia Institution of Professional Engineers New Zealand Local Government New Zealand Massey University (New Zealand).

6 Minerals Council of Australia Ministry of Agriculture and Forestry (New Zealand). Ministry of Economic Development (New Zealand). NSW Treasury Managed Fund New Zealand Society for Risk MANAGEMENT Risk MANAGEMENT Institution of Australasia Safety Institute of Australia Securities Institute of Australia University of New South Wales Victorian WorkCover Authority Water Services Association of Australia This is a free 10 page sample. Access the full version online. iii Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004. Contents 1 Scope and Commentary ..7. Background to risk MANAGEMENT ..7. Benefits of risk MANAGEMENT ..8. Applications of risk MANAGEMENT .

7 9. Corporate governance ..10. 2 Risk MANAGEMENT process overview .. 13. Commentary ..16. 3 Communication and consultation ..19. Commentary ..20. What is communication and consultation? ..20. Why communication and consultation are important ..21. Developing a process for communication and consultation ..24. 4 Establish the Commentary ..30. This is a free 10 page sample. Access the full version online. Objectives and environment ..30. Stakeholder identification and analysis ..31. Criteria ..32. Consequence Key elements ..34. Documentation of this step ..36. iv Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004. 5 Risk identification ..37.

8 Commentary ..38. Aim ..38. Components of a risk ..38. Identification Information for identifying Approaches to identifying risks ..40. Documentation of this step ..41. 6 Risk Commentary ..46. Consequence and likelihood Level of Uncertainty ..57. Analysing Methods of analysis ..60. Key questions in analysing risk ..60. Documentation of the 7 Risk evaluation ..63. This is a free 10 page sample. Access the full version online. Commentary ..64. Types of evaluation criteria ..64. Evaluation from qualitative Tolerable risk ..65. Judgement implicit in criteria ..66. Evaluation criteria and historical events ..66. v Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004.

9 8 Risk Commentary ..72. Identify Evaluate treatment Selecting options for treatment ..81. Preparing treatment plans ..86. Residual risk ..86. 9 Monitoring and review ..87. Commentary ..88. Purpose ..88. Changes in context and risks ..88. Risk MANAGEMENT assurance and Risk MANAGEMENT performance measurement ..91. Post-event 10 Recording the risk MANAGEMENT process ..95. Commentary ..96. Compliance and due diligence This is a free 10 page sample. Access the full version online. Risk register ..97. Risk treatment schedule and action Monitoring and audit documents ..97. Incident data Risk MANAGEMENT Plan ..98. vi Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004.

10 11 Establishing effective risk MANAGEMENT ..103. Commentary ..107. Policy ..107. MANAGEMENT commitment ..107. Responsibility and authority ..108. Resources and Culture change ..109. Monitor and review risk MANAGEMENT The challenge for leaders Integration ..110. The challenge for managers Leadership ..110. The challenge for all Continuous Key messages and questions for 12 References ..113. Standards and Further This is a free 10 page sample. Access the full version online. vii Risk MANAGEMENT GUIDELINES Companion to AS/NZS 4360:2004. Introduction Risk MANAGEMENT is a key business process within both the private and public sector around the world.