ISO 31000 and the Icelandic volcano crisis

The air traffic crisis provoked by the Icelandic volcano eruption, with its accompanying economic and societal effects, is analyzed through the lens of the ISO 31000 risk management standard in a new article just posted on ISO's Website.

The author is Kevin W. Knight, leader of the ISO group that developed the standard. On the crisis, he comments: "Surprisingly such an event does not appear to have featured as a risk that airlines and many other companies needed to manage…Given knowledge of the activity of the Icelandic volcano and the impact on aviation of past eruptions in Asia, it is surprising that no plans were in place to manage such a disruption-related risk."

He goes on to say: "The ash cloud is just another example of the ever-changing risks that must be managed in an increasingly global economy with greater reliance on 'just in time' delivery. One has to wonder just how seriously, if at all, top management participate in planning and testing of disruption-related risk scenarios."

However, Kevin Knight points out the counter example of an organization with a strong management of risk culture: "United Parcel Service (UPS) quickly redirected air freight bound from Asia to Europe to Istanbul and then loaded it onto trucks for delivery to its final destination."

Kevin Knight describes risk as follows: "Risk is all about uncertainty or, more importantly, the effect of uncertainty on the achievement of objectives.On 15 November 2009, ISO published ISO 31000:2009, Risk management – Principles and guidelines, to help industrial, commercial and public sector organizations to confidently address such risks."

ISO 31000:2009 sets out principles, a framework and a process for the management of risk that are applicable to any type of organization in public or private sector. It does not mandate a "one size fits all" approach, but rather emphasises the fact that the management of risk must be tailored to the specific needs and structure of the particular organization.

ISO 31000 requires significant commitment of Board and top management attention, as well as sufficient resources to translate commitment into action.It calls for a serious mandate and commitment from the Board, along with management leadership, to ensure it is woven into the organizational fabric and culture across the organization.

"The really successful organizations, like UPS," Kevin Knight concludes, "work on understanding the uncertainty involved in achieving their objectives and ensuring they manage their risks so as to ensure a successful outcome."