Page 53 - Risk Management in current scenario

Development in risk behaviour
As discussed above, behavior does not change in a day, but a human has
a habit of quick learning if they are bent in any particular direction. There
could be several methods of changing the behavior.

Humans learn in two ways, when there is a compulsion or when there is
a passion. You do not need to worry about those who have passion but
they will need guidance to move in the direction of understanding risk
management and the values that it adds to the business. This will entice
employees to naturally take up the profession and develop the habit of
learning.

The second way is a compulsion route followed by policies and
procedures including the linking of incentives both fixed and variable in
the proportion of benefit added to the Company through the route of
risk management. This should be started at the Board level followed by
Senior Management goal sheets and the rest of the employees. This will
help in properly implementing enterprise risk management across the
business. In Risk-based capital, managing risk is equivalent to managing
capital which will mean improvement in the shareholder's return.

At present, the Indian financial sector is some distance away from
embracing the risk-based capital, however, this presents a good
preparatory ground in the meantime to develop the formula for the
incentive right across the hierarchy.

Such behavioral change will lead to cultural change, helping in setting the
tone from the top to develop risk culture.

Change in attitude towards the risk
As seen above that the attitude comes from the way that you think and
feel about something, to further develop risk culture within the
organization, the attitude towards risk may be assessed at the time of
recruitment.

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