Risk Management Framework
A Risk Management Framework is the recurring cycle - context, identify, analyse, evaluate, treat, review - that turns risk management from something one department does informally into a shared process with named owners at each stage.
Six stages circle round, with review looping an arrow straight back into context.
Reach for this when…
- An audit finds three departments each run risk their own informal way.
- A new regulation now requires a documented risk process, not just a register nobody reads.
- Your risk register exists but nobody has reviewed it since it was created.
How to run it
- Establish the context: what objectives and scope the risk process covers.
- Identify risks against that context, not against a generic checklist.
- Analyse each risk's likelihood and consequence.
- Evaluate and prioritise against your risk appetite.
- Treat the risk: avoid, reduce, transfer or accept it, with an owner assigned.
- Monitor and review, feeding findings back into the context stage.
A worked example
Situation. Petra Novakova worked in operational risk at Banka Svratka, a regional bank in Brno, Czechia, where an internal audit found three departments running three different informal risk approaches, none reviewed on any set schedule.
Applied. She replaced the ad hoc versions with one cycle - context, identify, analyse, evaluate, treat, review - and put a named owner on each stage instead of leaving review to whoever remembered.
Result. The bank passed its next regulatory audit, and the review stage - now genuinely quarterly instead of theoretical - caught a liquidity exposure early enough to act on it before it became a finding.
The catch
The framework describes a cycle, not a guarantee - an organisation can run every stage on paper and still miss the risk that matters because nobody was honest at the identify stage. It also tends to produce long, defensible registers that satisfy an audit without changing a single actual decision.
A framework that never loops back from review to context is a one-time exercise wearing a cycle's clothing.
Origin: ISO 31000