Define risk management framework with reference.

A risk management framework is a structured approach to identifying, assessing, and managing risks within an organization. It provides a systematic process for understanding and addressing potential threats to the achievement of an organization's objectives.

Reference:
- The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines a risk management framework as "a structured and systematic approach to managing risk across an organization. It includes the policies, procedures, and practices that an organization implements to identify, assess, respond to, and monitor risks."
- The International Organization for Standardization (ISO) also provides guidelines for risk management in ISO 31000, which defines a risk management framework as "the set of components that provide the foundations and organizational arrangements for designing, implementing, monitoring, reviewing, and continually improving risk management throughout the organization."

Definition of Risk Management Framework

A risk management framework is a comprehensive and structured approach to identifying, assessing, and mitigating risks within an organization. It provides a systematic process for managing the full spectrum of risks that could impact the organization's objectives, operations, and reputation.

Reference:

International Organization for Standardization (ISO) 31000:2018, Risk Management -- Guidelines, defines a risk management framework as:

> "A set of components that provide guidance and support to the organization for managing risks."

Key Components of a Risk Management Framework

According to ISO 31000:2018, a risk management framework typically includes the following key components:

- Risk Context: Defines the organizational context, including its external environment, internal factors, and risk appetite.
- Risk Identification: Identifies potential risks that may impact the organization.
- Risk Assessment: Analyzes and evaluates identified risks to determine their likelihood and potential impact.
- Risk Treatment: Selects and implements strategies to mitigate, transfer, accept, or avoid identified risks.
- Risk Monitoring and Review: Tracks the progress of risk management activities and evaluates their effectiveness.
- Communication and Consultation: Provides a platform for sharing risk information and involving stakeholders in the risk management process.
- Top Management Commitment: Ensures that senior leadership supports and promotes a strong risk management culture throughout the organization.

Benefits of a Risk Management Framework

Implementing a risk management framework allows organizations to:

- Enhance decision-making processes by providing a clear understanding of risks and their potential impact.
- Improve risk mitigation and response efforts by systematically addressing all relevant risks.
- Minimize losses and disruptions by proactively identifying and mitigating potential threats.
- Build resilience and stakeholder confidence by demonstrating a proactive approach to risk management.
- Comply with regulatory requirements and industry best practices.