Risk Assessment
Running a business inevitably involves the analysis and handling of risk. Successful business-people do not merely accept risk, but know how to manage it. Managing risk encompasses both a preventative approach and putting the necessary systems in place to deal with risk when it arises.
Against the backdrop of a constantly changing environment, the identification and assessment of potential risk is a very demanding task. The central questions are: To what kinds of risk are we exposed? How threatening are these risks for our company and what is the potential damage?
Changes to the Swiss Code of Obligations in conjunction with the revision of auditing law will in future make it necessary for risk assessment information to be included in the notes accompanying the annual financial statements. This rule applies to public limited companies (AG) and limited liability companies (GmbH), irrespective of their size. Consequently, many smaller companies in Switzerland will be required to meet this requirement. Because the notes to the annual accounts are regarded as an auditable item, risk assessment information will also have to be examined by external auditors.
With these changes, legislators have aimed to ensure that, in order to protect the public interest, corporate risk is regularly monitored and analysed. A company’s Board of Directors must now evaluate all business-related risks in a forward-looking and systematic manner.
For further information, please refer to our brochure, “Risk Assessment – A New Legal Requirement”.
Martin Nay