A risk management system (RMS) is an integral part of the entire management system in a company. Taking into account risks and their probability of occurrence and the resulting effects on all activities of a company, risk management aims to continuously minimize risks and make them calculable. The RMS regulates the organizational structure, responsibilities, behaviors, procedures and means for defining and implementing the corporate risk policy.
Requirements for a risk management system (RMS)
- the management must adopt a risk policy with the requirement of continuous reductions of risks
- the determination and assessment of risks, their effects and probabilities of occurrence
- to present and minimize the company’s significant risks as a result
- the adoption of objectives and programmes
- the obligation to comply with the law
- the definition of a structure, a system and the necessary means to achieve the defined objectives
- regular risk audits to assess the impact of the RMS
Benefits of a risk management system
- Legal certainty and production security
- Minimize or insure liability risks for management and employees
- Compliance with Basel IlI (procedures for measuring credit risk) and KonTraG (Act on Control and Transparency in Business)
- Minimizing risks and making them calculable through emergency and precautionary measures
- Technological innovation through risk minimization
- Sensitization and motivation of employees
- Fulfilment of customer requirements (e.g. automotive industry)
- Transparency in relation to banks (Basel II), authorities (KonTraG) and insurance companies as well as better cooperation with banks, authorities and insurance companies
- Reduction of insurance premiums or examination of the insurability of a risk
Certification of a risk management system
Risk management is certified in accordance with ISO 17799 and BS 7799.
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