Risk Management Process – Communication and Consultation

Risk Management – Article 8

Risk Management Process – Communication and Consultation

Keshav Ram Singhal

Clause 5.2 of ISO 31000:2009 standard provides guidelines on communication and consultation in risk management process. During all stages of the risk management process, there should be regular communication and consultation with all stakeholders (internal as well as external). In this regard the organization should develop plans for communication and consultation at an early stage. The plans should address issues related to risks, their causes, their known effects and results (typically that may be unwelcome or unpleasant) and measures to be initiated and taken to treat risks. The communication and consultation with stakeholders should be effective to ensure understanding of the basis of decisions taken and the reasons of the particular reasons by all stakeholders and personnel accountable for implementing the risk management process.

Organizations need an effective consultation team approach in communication and consultation in risk management process. An effective consultation team approach is helpful in risk management process. An effective consultative team approach leads to many benefits. It helps to establish the organization’s context properly. It ensures understanding stakeholders’ interests. It also ensures considering stakeholders’ interests. An effective consultative team approach helps ensuring adequately identifying risks. It brings together expertise pertaining to different areas for risk analysis. It ensures appropriately considering different views while defining risk criteria. It also ensures appropriately considering different views in evaluating risks. It secures endorsing and supporting a plan for risk management treatment. An effective consultative team approach supports and enhances appropriate change management during the risk management process. It develops appropriate communication (external and internal) plan. It develops appropriate consultation (external and internal) plan.

Stakeholders make their judgements about risk based on their perceptions of risk, therefore communication and consultation is important in risk management process. Perceptions of stakeholders may vary due to differences in shareholders’ values, needs, assumptions, concepts and concerns. Shareholders’ views can have a significant impact on the decisions made on risk management process, therefore there is need to identify the perception of stakeholders, record and consider the same.

In the communication and consultation process with the stakeholders, considering the confidentiality and personal integrity aspect, exchange of information between organization and stakeholders should be:
- Truthful
- Relevant
- Accurate
- Understandable

Communication and consultation in risk management process may be summarized as under:
- Identify all stakeholders (internal and external)
- Develop plans for communication and consultation
- Apply an effective consultative team approach
- Identify stakeholders’ perceptions, record and consider the same