Factsheet for measure
DE-1998-18/2476
– measures in Germany
Statutory risk management systems in public companies
Risikofrüherkennungssysteme in Aktiengesellschaften
Background information
Early knowledge of potential internal and external risks that could jeopardize the continued existence of the company is supposed to help public limited companies to develop suitable solutions in response. As companies work in a constantly changing environments, risk identification and controlling shall be conducted on a continuous basis. This is done by implementing a mandatory risk management system on the basis of the Stock Corporation Law and supplementary laws.
Content of measure
Paragraph 91/2 of the Stock Corporation Law requires public limited companies to establish a system of measures and control instruments that are able to identify developments, at an early stage, that might negatively affect the continued existence of the company.
The legislator requires a monitoring system for the early detection of risks and the creation of appropriate communication structures that ensure that the decision-makers are able to initiate suitable countermeasures in good time.
In the annual management report with forecast character, the auditors must document in a special part of the audit report that measures have been taken and how they are designed, how effective these measures are, and document which measures are required to improve the internal monitoring system.
Use of measure
While all public limited companies must implement a risk mangement systems, the effectiveness of these measures are dependent on different factors. Mülller (2014) concludes that risk management systems are not a panacea for preventing corporate crises. In recent company failures, management either consciously accepted risks or concealed existing risks from supervisory bodies through so-called management override.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Larger corporations
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Does not apply to citizens
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Actors and funding
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Actors
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Funding
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National government
Company / Companies
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No special funding required
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Unknown
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Unknown
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Form
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Not applicable
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Not applicable
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Social partners' role in the
implementation, monitoring and assessment phase:
-
Unknown
-
Main level of involvement: Unknown
Involvement
Unknown
Views and reactions
Unknown
Sources
