Risk Management Articles

Latest risk management articles to help you better understand the complex world of Risk management. If you would like to submit your articles of interest, do write to manoj.jain@riskpro.in and we will surely include your articles in this section.

Does it pay off to enhance a company|s risk management framework?

Free advice is always free. But some high end advice and consulting is not only chargeable, but also can be expensive at times. This very fact prevents many eager corporates to defer enhancements to risk management systems and practices. Often companies call for consultant meetings, but end up trashing their recommendations and brochures.

Why is it that companies feel that such consulting is not worth the money spent? Why is it that risk management projects are always last in the list. Given below are various reasons why we believe that risk management does pay off.

Name Lending: A poor form of credit risk management

We all know what name lending is what goes behind the scenes to sanction a term loan to a large corporate that is well known in the market. But is it good risk management practice.

Risk Management in India is mainly compliance driven

There are good practices of risk management. Then there are best practices for risk management. But have you heard of compliance driven practices of risk management.

Indian banks are adopting risk management frameworks, initiatives mainly due to the regulatory compliance to have these initiatives in place. altough many banks realize that having good risk management systems is a boon to overall business growth, banks still want to do only so much that will get them to comply with regulations.

More room to improve corporate governance, says the Government

In a bid to strengthen corporate governance across India Inc, the government is considering additional voluntary guidelines for adoption by the industry.

Some of the significant recommendations are as follows:

1. The government now wants separation of roles of Chairman and CEO. The government belives that these are crucial roles and the current practice is that many listed companies have tese two offices being occupied by the same person, usually the promoter of the company who does not want to give away decision making rights to others.

Retirement of Independent Directors after 6 years

It seems that the Institute of Company Secretaries of India (ICSI) is doing a good job to better corporate governance in India Inc. In an news article in Times of India on Dec 21, 2009, it was noted that to ensure better corporate governance, ICSI was seeking a more effective role by independent directors. ICSI has recommended a limited six-year term for them and suggested that nominees of financial institutions should not be treated as independent since they had their own interests to protect. These recommendations are in light of the recent Satyam fraud.

Tiger Woods is a classic example of risk management failure for Accenture

What does Tiger Woods have to do with “All eggs in one basket”? Nothing except that Accenture decided to treat Tiger woods as the “ONE BASKET” that will deliver exceptional gains for Accenture. Accenture decided to base its branding wholly on one person that was considered undefeatable and considered as the person who could deliver “High Performance” each time he went out to play.

EYs ERM Roadmap

Many consulting and risk management firms have their own methodologies for implementing Enterprise Risk Management Framework for their clients. Some use the COSO’s ERM Frameworks, others have developed their own models and methodologies and still others, although having own methodologies prefer to customize model specifically for the client.

The methodology below is used by EY – India for ERM roadmap. The information below has been summarised based on presentation delivered by EY India in 2008 at Bangalore. For further information, readers may please contact EY-India.

Wipro's Risk Management Model

Foundation of risk management is the “Wipro Top 10 Risks approach”. Basically, this involves identifying and managing top 10 risks of the organisation. It may seem strange that a large organisation like Wipro has only 10 risks to manage.

But the beauty of this model is that senior management is focused on what matters the most. As and when any of these top 10 risks are well managed, the 11th risk becomes part of the top 10 and so on. So, at any point in time, there are top 10 risks which is the core element of the risk management model.

Role of a CRO

Senior Supervisors Group (SSG) had carried out a self assessment survey to analyse the 2008 debacle. Isnt it funny that one year period in the past 100 years is all set to dramatically change the way business is being done. Risk management has taken a new meaning and every organisation is taking 2008 debacle as the example to set things straight, including in firms that were once considered to be world class.

Re-Examining Existing Risk Management

Rapidly changing economic and market conditions give rise to unusual changes in risks for many organizations.We take two very critical issues in such a situation. Issues that can bring down an empire in an instant.

1. Performance liked executive compensation


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