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In the context of an increasingly dynamic and complex business environment, effective risk management has become a fundamental organizational capability. This thesis presents the systematic development of a comprehensive risk assessment framework grounded in ISO 31000:2018 principles and demonstrates its practical application within the scope of environmental and social auditing aligned with International Finance Corporation (IFC) Performance Standards. The framework was developed through an in-depth analysis of ISO 31000 guidelines, integration of industry best practices, and alignment with organizational risk management requirements. It encompasses nine key risk categories: strategic, operational, compliance, financial, environmental, social, reputational, emerging, and governance risks, offering a holistic structure for comprehensive risk identification and assessment.
The framework was practically validated during an environmental and social audit of a manufacturing organization operating across three sites in India (Noida, Ghaziabad, and Ludhiana), conducted as part of the organization’s due diligence process for securing loan approval from the Global Environment Facility (GEF). The audit, performed in alignment with IFC Performance Standards 1-4, employed a combination of stakeholder interviews, document reviews, and detailed site assessments. The application of the framework facilitated the identification of thirteen significant compliance gaps and risk areas, including deficiencies in human rights policies, grievance mechanisms, wage compliance, and multiple operational safety concerns.
The study demonstrates that the integration of ISO 31000 principles with sector-specific standards such as the IFC Performance Standards enhances the comprehensiveness and effectiveness of risk assessments, supports systematic decision-making, and strengthens organizational compliance in complex regulatory environments. The findings contribute to both the theoretical advancement of risk assessment methodologies and their practical application in cross-standard audit scenarios, offering valuable insights for organizations seeking to enhance their risk management and audit practices.
Keywords: ISO 31000, Risk Assessment Framework, IFC Performance Standards, Environmental and Social Audit.
