The current edition of the NSE Quarterly Briefing is on “Risk Management and the Board of Directors in Indian Firms” and is drafted by Professor Afra Afsharipour. The executive summary is as follows:
- Enterprise Risk Management (“ERM”) is a systematic and holistic approach for firms to address all their risks, whether operational, strategic or financial.
- Although not involved in the everyday management of risk, the board of directors plays an important oversight role in ERM by guiding and reviewing the company’s risk policy and ensuring that an effective risk management system is in place.
- Like elsewhere in the world, India’s regulatory structure provides that the board must play a central role in risk management.
- Corporate India has become much more engaged with ERM, although there is room for improvement.
- Enhancing the board’s risk management role can help address the many complex areas of risk faced by Indian firms.