Page 48 - Risk Management in current scenario

anywhere but still, it flows within the organization. It is infectious. Great
organizations are separated from ordinary ones on grounds of culture.

The same is true with risk culture; it is in the system but cannot be seen
by the naked eye. What does this mean? Does every employee of the
organization turn his thinking to considering risk as a part of everyday
work? Is risk considered in every decision-making process? Does a new
employee automatically learn from his/her peers on how to think in the
new organization, giving due consideration to risk without any formal
training?

The way IIMs are differentiated from other business schools, similarly,
risk-focused organizations will have better standing compared to their
competitors which may be reflected in their stock prices. The Indian
insurance industry is fast raising public money from the market through
the IPO route. The Indian insurance regulator has shown willingness to
move to risk-based capital.

The Indian Banking industry under the regulatory regime of RBI has a
target of implementing risk-based capital under Basel-III by March 2019.
Similarly, there is a regulation of SEBI to implement risk management for
top 100 listed companies and there is a similar requirement under
Company Law 2013 asking for risk management assessment by the Board.
This tells us that in the next 5 to 10 years' time, risk management will be
at the forefront of the Board, one to implement and second to take value
addition through its implementation.

Risk Management or Enterprise Risk Management (ERM) cannot be
successful without properly developing risk culture. Without risk culture,
risk management is just a tick in the box exercise and those listed
companies may get a bitter taste if any risk event crystallizes which is
not anticipated, the stock price may nosedive. This is because, particularly,
the Indian insurance sector does not have the experience of handling the
crystallization of risk event as insurance companies were never listed in

46 | Risk Management in Current Scenario