What is a risk management framework?

A risk management framework is a key component of an overall governance framework.   As the name suggests it focuses on risks faced by the business.  Typically, a governance framework will document the approach an organisation takes to managing risks and include details of:

  • Risk appetite – being a measure of the level of risk an organisation is willing to assume;
  • Risk tolerance – being a measure of the amount of risk an organisation is capable of absorbing; and
  • Risks – being details of the types of risk which the organisation faces and seeks to avoid, mitigate or accept.

In developing a risk management framework an organisation should refer to AS ISO 31000:2018 Risk Management Guidelines which sets out the process principles and framework for risk management.

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