Risk Management in Germany

Foreign investors interested in the business environment available in Germany can establish their business operations in accordance with the local legislation. It is important to know that for a business to succeed and accomplish its business plans, the management of the company should carry out activities for the identification of possible risks which may appear during the decision-making process. Our team of German lawyers can assist local and foreign businessmen, by providing efficient risk management strategies. 

 

Risk management refers to the process carried out by representatives of the company when they have to assess the risks incurred by an investment action. The risks are calculated in accordance with the investment objectives of the investors and the level of tolerance for risks; our team of German attorneys can provide assistance on this matter.  

 

Risk management strategies and procedures are implemented in accordance with a set of rules and regulations imposed by the Federal Financial Supervisory Authority in Germany. 

 

The act, entitled Minimum Requirements for Risk Management (MaRisk), provides the legal requirements under which risk management can be applied. 

 

The MaRisk stipulates that risk management refers to the following: 

 

• determination of the necessary risk strategies a company should follow;

• establishing internal surveillance procedures, that can also refer to internal audits. 

 

The act is available to banking and financial institutions with activities in Germany. According with the stipulations of the document, risk can refer to:

 

• counterparty risks;

• market price risks;

• liquidity risks;

• operational risks.

 

The legislation applicable to financial institutions in Germany became effective in 2010, strengthening the rules related to the risk management procedures which should be imposed to such types of companies. 

 

If you need further information on the risk management applicable in Germany, please contact our team of German lawyers.