Page 37 - Risk Management in current scenario

a key step in the process of risk management. The recent changes in
corporate governance guidelines made in Indian financial institutions are
as follows:
X IRDA (Insurance Regulatory and Development Authority) - 2016
Corporate Governance Guidelines are sharper and have described the
objectives of risk management committee. The guidelines also state
that certain positions cannot be held by the same individual due to
conflict of interest.

X Reserve Bank of India - governs the risk management activities for
Indian Banks.

X SEBI (Security Exchange Board of India) - 2015 Corporate Governance
Guidelines for listing companies. In 2017, SEBI has issued a circular
on Board evaluation.

X Company Laws - 2013 Company law requires having risk
management assessment by the Board.

What is risk management?
Risk management is a proactive step of identification of risks, assessing
their impact, and preparing an action plan should such risks occur in
reality. Risk management is not just about identifying the risks;
management action is an integral part of the process. Stressing the same
point, the Chinese President quoted while addressing the National
Financial Conference that "Failure to detect financial risk is a breach of
duty; spotting risks without addressing them, a refusal to perform the
duty".

It is important to understand that risk management through a silo
approach is no longer sufficient where risk management is performed by
a few departments only. In the Enterprise Risk Management (ERM)
concept, risk management is performed across the organization where
every employee is a risk manager. The silo approach to risk management
does not work as risks are highly correlated and cannot be segmented

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