Governance: Risk management system
Financial undertakings should have in place a good governance system. One element of good governance is an adequate risk management system.
A financial undertaking should have an adequate risk management system, or effective processes for identifying, measuring or gauging, monitoring, mitigating and reporting on risks.
It is important for an undertaking to have organised its risk management in a clear and transparent manner, for example through processes concerning strategy, policy, individual risks, the integration into business operations, and the division of capacity and responsibilities. If risk management is to operate properly, it is important for all risks and risk areas to be managed: both individually and in their interaction with one another.