Indian firms not confident of risk management: survey
Thursday, 07 April 2011, 06:49 IST
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Indian firms not confident of risk management: survey
New Delhi: Indian companies are not very confident that the measures they have in place to manage contingencies will work and to quite an extent the firms tend to rely on key executives to evaluate risks instead of following well-laid out processes, according to a survey by global audit and advisory major KPMG. The survey conducted across Europe, Middle East, Africa and India had close to 500 companies participating in it. More than 57 percent of the respondents were from Indian firms. More than 77 percent of the Indian firms which responded said they were facing increasing risks in the past 2-3 years, but only 59 percent of them had a formal risk management framework in place. Also a majority of the companies said they were not entirely confident that the risk management policy in place was good enough to identify emerging risks. About 68 percent of the Indian companies that responded to the survey did not have a chief risk officer and 37 percent of them said they did not intend to appoint one as they did not believe it would lead to any perceptible change in the quality of risk management practices. The draft Companies Bill proposes to mandate a company's board to review and affirm its risk management policies and practices. But KPMG said that in some ways increase in regulation was part of the problem. "Organisations were not completely successful in aligning risk perceptions and appetite of key stakeholders with that of individual decision makers, resulting in sub-optimal business decisions being made," said Neville Dumasia, head of governance, risk and compliance, KPMG in India. The advisory services major suggested some measures to overcome challenges in managing risk which include: - Get specialists to improve understanding of key risks. - Integrate risk management into decision making by leveraging risk indicators - key trends that can be predicted with the help of risk management tools could help organisations have a better grip on what is around the corner. - Positioning the chief risk officer as a strategic business advisor.
Source: IANS
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