4.1 Understanding the Organization and its Context [ISO 45001 Procedure]

What is Understanding the Organization and its Context for ISO 45001?

Clause 4.1 of ISO 45001:2018 requires the provision of a high-level understanding of key issues that can affect OH&S both positively and negatively within the organization. Using this information will help develop an understanding of internal and external issues and the interaction of activities to help plan and develop controls within the system.

Contents

What Are Internal and External Issues?

Internal and external issues are circumstances, characteristics and changes which can positively or negatively influence the OH&S Management System. It is imperative these are identified so that there is clear understanding and appreciation of the operating environment.

How to Document Internal & External Issues Relevant To Your Organization

Use a Context & Interested Parties Matrix to document any external and internal issues relevant to your organization's operational purpose and strategic direction that may affect its ability to achieve the intended result of the management system.

To assess whether your organization has a high-level, conceptual understanding of its internal and external issues that affect it, either positively or negatively, its ability to achieve the intended outcomes, you should describe the processes used by your organization to identify internal and external issues and make reference to all objective evidence, including examples of these issues.

Examples of organizational issues might include:

  • Health and safety conditions capable of affecting or being affected by the organization;
  • External: cultural, social, political, regulatory, financial, economic, natural and competitive issues, whether international, national, regional or local;
  • Internal: organization’s activities, products, services, strategic direction and capabilities (people, knowledge, processes, systems).

You will need to determine and understand the various health and safety conditions, internal and external issues, typically experienced in your type of organization that can have positive or negative impacts.

The standards do not specify that these internal and external issues, or their monitoring and review, be documented, so there might not be ‘lists of issues’ or records of reviews. However, information can be obtained via interviews with relevant Top Management in relation to your organization’s context and its strategic direction, the identified issues and conditions, and how these may affect the intended outcomes of the management system.

Documentation & Evidence

Collate evidence to provide assurance that your organization is regularly, or as necessary, reviewing and updating its external and internal issues. Although there is no requirement for documented information to define the context of the organization, your organization will find it helpful to retain the types of documented information listed below to help demonstrate compliance:

  • Business plans and strategy reviews
  • Competitor analysis
  • Economic reports from business sectors or consultant’s reports
  • SWOT analysis for internal issues
  • PESTLE analysis for external issues
  • List of external and internal OH&S issues and conditions
  • OH&S action plans and objectives
  • Annual reports
  • Minutes of meetings (Management review and, e.g. design review minutes)
  • Process maps, tables, spreadsheets, mind mapping diagrams

Reviewing your organization’s context could include interviews with senior management, questionnaires, surveys and research. Cross-functional input is essential for the specific expertise required to identify the full breadth of issues, such as finance, training, human resources, commercial, engineering and design, etc. Not only will this ensure a broader appreciation of the context but also wider engagement, particularly with those functions not previously involved with the OH&S Management System.

Using SWOT and PESTLE Analysis Templates, undertake an analysis of internal and external issues. This provides clear evidence that a comprehensive process has been carried out to understand the context within which your organization operates. This activity will also help to determine the scope of OH&S Management System as required under Clause 4.3 and 9.3.

With the information that is gathered during discussions at all levels of the organization to determine context, it is recommended this information is placed into a report. The benefit of this is it provides a cohesive explanation and a good reference to support present and future business strategy.

Document files

Documenting Internal Issues

Using a SWOT Analysis Template will help you identify and analyze your organization’s strengths, weaknesses, opportunities and threats.

Below are typical examples, however each issue will be focused on the individual organization:

Strengths

Strengths are characteristics of our organization that allow operation more efficiently and effectively than competitors.

  • What does our organization do well?
  • What advantages does our business have over other internal sections or external organizations, including competitors?
  • What makes our organization different from competitors?

Weaknesses

Weaknesses are areas that are recognized as needing improvement.

  • What can be done better?
  • What causes problems or complaints (information from root-cause analysis)?
  • Which capabilities need modifying, strengthening or divesting for the future?

Opportunities

Opportunities are trends, circumstances or business opportunities that may be taken advantage of.

  • What are the changes in technology or markets?
  • What local and global events may be useful?
  • What are the changes in customer/societal values?

Threats

Threats can be external or internal and are anything that can adversely affect business or operations.

External threats could be economic, new legislation or even a new competitor in the market.

Internal threats could be a skill or staff shortage within our organization.

  • What obstacles are there for ongoing operation?
  • Are there any potential competitors to the business?
  • Who might be the new competition?
  • Are there any potential changes to staffing, products, services or technology that could threaten operation or business?

World map Understanding the organization and its context

Documenting External Issues

A workshop approach often allows ideas to be shared and provides an effective and efficient way of achieving a valuable outcome. The workshop could simply be a discussion identifying the issues that can be mapped out using Political, Environmental, Social, Technological, Legal and Economic (PESTLE) analysis.

This method helps to structure the conversation and will also help to achieve buy-in to what is often seen as a peripheral or niche area.

PESTLE Analysis - Political

What is happening politically in the environment in which we operate?

  • Trading policies
  • Funding, grants and initiatives
  • Home market lobbying/pressure groups
  • International pressure groups
  • Wars and conflict
  • Government policies, term and change
  • Inter-country relationships and attitudes
  • Political trends
  • Internal political issues
  • Shareholder needs and demands

PESTLE Analysis - Environmental

What is happening with respect to ecological and environmental issues?

  • General market conditions that affect the business
  • Market direction
  • Environmental issues
  • Environmental regulations
  • Stakeholder/investor values
  • Needs for the organization’s products and services in the market
  • Customer market technology opportunities
  • Competitors and differences between competitors
  • Competitiveness of the organization and what affects its ability to compete
  • Customer problems and complaints with current products and services

PESTLE Analysis - Social

What is occurring socially and culturally in the markets in which we operate?

  • Current or emerging trends in lifestyle and their implications
  • Demographic trends that may affect market size (growth rate, income, population shifts)
  • Whether these trends represent an opportunity or a threat
  • Changes in consumer behaviour
  • Increasing environmental awareness
  • Urbanization
  • Consumer demands; personalization and high-end experiences
  • Public demand for transparency and participation in decision-making

PESTLE Analysis - Technological

What is happening technology-wise which can impact what we do?

  • Maturation of existing technologies
  • Technological developments or trends that affect or could affect the business
  • New product development and potential markets: government, international, resource sector, etc.
  • Productivity improvements through automation
  • Telecommunication infrastructure
  • Online connectivity and digital data

PESTLE Analysis - Legal

What is happening with changes to legislation?

  • Possible changes in regulation/legislation
  • Impacts of these changes on business
  • Stability of government
  • Outsourcing regulations
  • Government bureaucracy – rules and regulations
  • Legal constraints

PESTLE Analysis - Economy

What is happening within the economy?

  • National and internal financial trends (trends in economic forces)
  • Economic trends that may have an impact on business activity
  • Emerging markets
  • Inflation, employment levels, supply
  • Energy available
  • Global financial situation

example issues

Examples of Internal Issues

  • Governance, organizational structure, roles and accountabilities
  • Policies, objectives and the strategies in place to achieve them
  • Resources (including human), knowledge and competence
  • OH&S culture within the organization and the relationship with worker
  • Process for the introduction of new products, materials, services, tools, software, premises and equipment
  • Working conditions

Examples of External Issues

  • Cultural, social, political, legal, financial, technological, economic and natural surroundings including the environment in which the organization operates
  • Who the competitors are and any contractors, subcontractors, suppliers, partners and providers
  • National and international law
  • Industry drivers and trends which have influence on the organization
  • The organization products and services and their influence on occupational health and safety

Finally

Ensure that OH&S-related internal and external factors and conditions have been identified that could affect, or be affected by, your organisation’s activities. Ensure that any significant risks and opportunities been identified.

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Organizational Context Procedure

The purpose of this procedure is to outline your organization’s process for the identification and determination of internal and external issues, interested party requirements, management system scope and processes that relate to our health and safety management system, and which influence our strategic direction (where we’re going) and our operational purpose (what we make and do).

Forms & Reports also included:

  • Organizational Context Process Turtle Diagram
  • Context & Interested Parties Analysis
  • Process Matrix & Application
  • SWOT Analysis Template
  • PESTLE Analysis Template

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