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IndicatorsCEO Confidence SurveyConsumer ConfidenceSurveyStraightTalkAnnual EssaysBooksSponsored ResearchOur MagazineOrganization ChartsAsk The LibraryPodcastsIndian Firms Begin to Embrace Enterprise Risk Management — New Conference Board Research Examines Risk Management in India
Intense global competition and rapid growth are forcing Indian firms to examine corporate enterprise risk management (ERM) as one key to continued sucess. ERM is a cohesive, enterprise-wide process allowing companies to identify, assess and respond to the social, political and economic risks of doing business. A new Conference Board study, sponsored by KPMG India and SAP India, examines the state of risk management integration in companies based in India, and includes case studies of four major India-based multinational firms: Tata Motors Ltd., ICICI Bank, Tata Chemicals Ltd., and Dr. Reddy's. The study authors took part in a round table discussion with leading Indian businesspeople this February.
"ERM is in the very early stages in India," says Matteo Tonello, Senior Research Associate at The Conference Board Governance Center, and a co-author of the report. "As Indian firms expand beyond national borders, they become exposed to more strategic and operational risks, including those from different geopolitical and cultural contexts. Tightening capital markets, the internationalization of successful Indian companies and the adoption of global initiatives to promote business integrity are forcing many firms to pay attention to recent developments in risk management around the globe. Assimilating international standards of risk management is becoming a necessity to remain competitive."
According to Poonam Barua, Regional Director — India, The Conference Board, "As Indian companies begin to grow globally, they will need to increasingly view enterprise risk management as a board responsibility and put into place a Risk Committee that reports to the Board — to get maximum value from this strategic corporate function. So far, the custodian of ERM practices still remains the Audit Committee in most Indian companies, which limits its focus to primarily financial issues, without addressing areas such as managing high growth, business execution, innovation, talent retention, succession planning, industrial safety and environment change, and related issues which form an important part of a best practice ERM strategy."
