Risk Management
Enterprise Risk Management
- board of directors,
- management and other personnel,
Various Risk Management Standards
Risk management Frequently Asked Questions
What are the legally mandated risk accountability of Top Management?
Requirement as per Companies Act, 2013
Responsibility of the Board: As per Section 134 (n) of the Act, The board of directors’ report must include a statement indicating development and implementation of a risk management policy for the Company including identification of elements of risk, if any, which in the opinion of the board may threaten the existence of the Company.
Responsibility of the Audit Committee:
As per Section 177 4)(vii) of the Act, the Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall, inter alia, include evaluation of internal financial controls and risk management systems.
Responsibility of the Independent Directors:
As per Schedule IV [Part II-(4)] of the Act, Independent directors should satisfy themselves that financial controls and the systems of risk management are robust and defensible.
Requirement of Clause 49 of the Listing Agreement
The company through its Board of Directors shall constitute a Risk Management Committee. The Board shall define the roles and responsibilities of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit.
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What is the framework for Value Creation and Protection through Risk Management as per ISO 31000 : 2018?
Integrated
The organization integrates risk management activities in all of its activities
Structured and comprehensive
The risk management is established upon a structured and comprehensive approach to get consistent results
Customised
The risk management is linked to organizational objectives and is tailored to fit the organizational context
Inclusive
The risk management includes necessary stakeholders and takes into account their knowledge, views and perception
Dynamic
Considering, both internal and external context changes, risk management is able to detect and respond to those changes appropriately
Best available information
Risk management accounts for any limitations and uncertainties regarding the provided historical and current information and future expectations
Human and cultural factors
Both human behavior and culture influence the risk management heavily. Therefore, these characteristics are taken into account in all aspects of risk management
Continual improvement
The organizations risk management is continually improved
Context
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Internal Context |
External Context |
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Governance, organizational structure, roles & accountabilities
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Social, cultural, political, legal, regulatory, financial, technological, economic, natural and competitive environment
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Policies, objectives & strategy
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Key drivers and trends that will have an impact on your organization
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Capabilities & resources
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Relationships with and perceptions & values of external stakeholders
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Info systems
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Organizational culture
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Contractual relationships
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Relationships with, perceptions & values of internal stakeholders
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Rsik Conundrum
How to understand Risk, Ambiguity, Uncertainity and Ignorance?
Risk Management Process
Risk Evaluation
Environment : Precauationary Principle
(Article 21 - Protection of life and personal liberty)
Terms & Definitions
| Terms | Definitions |
| Entity | A business entity is an entity that is formed and administered as per commercial law in order to engage in business activities, charitable work, or other activities allowable. Most often, business entities are formed to sell a product or a service. |
| Potential events | risk-handling actions that result in the discovery of new risks or new risk-handling options that may require planning and assessment. The identified risks are potential events where it match or exceed the acceptability thresholds associated with the risk therby requiring a risk mitigation plan |
| Risk appetite | the amount and type of risk that an entrprise is willing to take in order to meet its strategic objectives |
| Reasonable assurance |
‘Reasonable assurance’ is the level of confidence that the risk classification is not materially misstated and the risk management process ensures the planner of control, the authority accountable or the stakeholder concerned are alerted reasonably.
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