Understanding the potential causes of risk events will primarily help an organisation to

Understanding the potential causes of risk events is a core component of risk analysis within the ISO 31000 framework. This knowledge enables an organization to select and implement effective risk treatment options, such as controls aimed at removing the risk source or changing the likelihood of an event. By addressing the root causes, the organization can proactively prevent or reduce the occurrence of risk events. This directly translates to a reduction in the frequency of the event and, consequently, the frequency of any associated loss. This is a primary objective of proactive risk management.

A. Complying with corporate governance is a high-level outcome of an entire risk management framework, not the primary result of understanding the causes of a single risk event.

B. The goal of risk management is not to eliminate all risks, which is often impossible and impractical, but to manage them to an acceptable level.

C. While risk analysis informs the focus of internal audits, the primary purpose of understanding risk causes is to treat the risk itself, not solely to improve audit procedures.

1. ISO 31000:2018

Risk management — Guidelines.

Section 6.4.3 (Risk analysis): States that "Risk analysis involves a detailed consideration of... risk sources

consequences

likelihood

events

scenarios

controls and their effectiveness." Understanding causes (risk sources) is fundamental to analyzing likelihood (frequency).

Section 6.5.2 (Selection of risk treatment options): Lists "removing the risk source" and "changing the likelihood" as key treatment options. Both are directly dependent on first understanding the cause of the risk.

2. Purdy

G. (2010). ISO 31000:2009—Setting a New Standard for Risk Management. Risk Analysis: An International Journal

30(6)

881-886.

Page 884: The article explains that the ISO 31000 process

including analysis of causes and likelihood

is designed to lead to effective risk treatment. Effective treatment often manifests as a reduction in the frequency or severity of adverse events. (https://doi.org/10.1111/j.1539-6924.2010.01442.x)

3. University of Queensland

Courseware for RISK3001 - Risk Management.

Module 3: Risk Assessment: Lecture materials emphasize that identifying risk causes is a prerequisite for assessing likelihood. Controls are then designed to act on these causes to reduce the likelihood of the risk event occurring

thereby managing the risk.