What is risk code in SAP (FS-CMS - Collateral Management System)?

SAP Term: risk code

• Component: FS-CMS

• Component Name: Collateral Management System

• Description: A definable classification of the risk that is connected to the asset. The risk code can be specified depending on the asset type.

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• Key Concepts: 
  Risk codes are used in the FS-CMS Collateral Management System (CMS) to identify and classify the risk associated with a particular collateral. Risk codes are assigned to each collateral based on its characteristics, such as its type, size, and market value. The risk code is used to determine the amount of collateral that must be held by the lender in order to protect against potential losses. 
  
  How to use it: 
  In order to assign a risk code to a particular collateral, the lender must first assess the risk associated with it. This assessment should include an analysis of the collateral’s type, size, and market value. Once the risk has been assessed, the lender can assign a risk code to the collateral. The risk code will then be used to determine the amount of collateral that must be held by the lender in order to protect against potential losses. 
  
  Tips & Tricks: 
  When assigning a risk code to a particular collateral, it is important to consider all of its characteristics. This will ensure that the correct amount of collateral is held by the lender in order to protect against potential losses. Additionally, it is important to regularly review and update risk codes as market conditions change in order to ensure that they remain accurate and up-to-date. 
  
  Related Information: 
  For more information on risk codes and how they are used in FS-CMS Collateral Management System (CMS), please refer to SAP’s official documentation on the topic. Additionally, there are many online resources available that provide further information on risk codes and their use in CMS.