Assessing the Climate for Enterprise Risk Management in India
As Indian firms expand beyond national borders, they are increasingly exposed to a new array of strategic and operational risks, including those derived from different geopolitical and cultural contexts. This report, the result of research conducted by The Conference Board in late 2007 and early 2008 looks at the state of Enterprise Risk Management (ERM) integration in India-based corporations and examines emerging practices in this area by four leading corporations in India: Tata Motors Ltd.; Tata Chemicals Ltd.; Dr. Reddy's; and ICICI Bank.
Among the key findings and trends now emerging in India with regard to ERM:
- Much of the focus in ERM in Indian companies to date has been on the downside risk, not the opportunity side of the equation. Part of the cultural change that ERM brings is the understanding that ERM can help to identify opportunities and their associated risks and rewards.
- Three of the four India-based multinational companies examined in this report have adopted ERM in part because they have securities listed in the United States as well as in India. Board members at those companies believe that a comprehensive approach to managing risk is one way to satisfy listing requirements across geographies.
- The value proposition for ERM is not yet evident for most Indian companies. Most companies and boards that have begun ERM are doing so more as compliance exercise than a strategic one.