FERMA's concerns with ISO risk management standard challenged

Kevin Knight, convenor of the ISO Working Group on Risk Management, has expressed his concern with FERMA’s position paper on the new ISO Risk Management Standard (31000).

Knight said that FERMA’s position paper makes “wholly incorrect assertions…based on many errors and inaccuracies.”

Knight addressed FERMA’s belief that new rules and regulations are making corporate managers more reluctant to take risks, and said: “Establishing a common global standard for risk management will reduce the complexity and diversity of regulation now and will provide a sound model for new risk-based regulation.”

FERMA said that a standard cannot readily eliminate organizational differences. Knight agreed and said: “The standard requires that risk management should be tailored to align it with the organization’s external and internal context and risk profile.”

In contrast to FERMA’s concern about a lack of consensus on scope, processes and tools for risk assessment and risk treatment, Knight said there was an extraordinary level of consensus amongst the Working Group.

FERMA said: “It is not in the best interest of our corporations for risk communication to be standardized.” Knight responded that rather than a standardization, “the standard requires an organisation to establish a process for ensuring stakeholders are appropriately communicated and consulted with, in respect of risk.”

According to Knight: “FERMA believes that extreme caution is required in the development of an ISO standard on risk management.”

He added: “The working group that has developed the standard is large and very diverse with representations from a large number of countries and organizations.”