The risk monitoring system ensures that the company’s risk status corresponds to the desired risk position over time.
Monitoring instruments are:
variance analysis
internal control system
monitoring changes in risks over time
The variance analysis relates to the adherence to limits set by management. These limits represent maximum loss ceilings for certain periods of time.
The internal control system can ensure that the company’s processes are effective, appropriate and efficient for their respective intended purpose.
Monitoring changes in risks over time includes timely communication of deviations to management and taking appropriate corrective action.
Finally, the entire risk management system, including all control structures, has to be monitored for effectiveness, appropriateness and efficiency on an ongoing basis. Weaknesses have to be identified and corrective action taken.
