Risk management in Indian companies: EWRM concerns and issues

Abstract

PurposeThe purpose of this paper is to examine the current status of risk management in Indian companies and explore the reasons for the adoption or lack of adoption of integrated approach to risk management. It identifies the imperatives for implementation of comprehensive risk management solutions leading to enterprise‐wide risk management (EWRM). The paper shows that effective risk management can improve organizational performance but adequate infrastructure is not available in companies for implementing EWRM.Design/methodology/approachExploratory design using the survey research methodology that includes structured questionnaires and interviews of 130 companies.FindingsRisk management in Indian companies is currently facing the problem of integration and incentivisation. The risk management function is not suitably blended into the corporate strategy and use of information technology for risk management is minimal. The portfolio approach to risk management titled as integrated risk management or EWRM is ineffective from an implementation perspective and a sea change in risk perception is required which accentuates the need for building up of risk culture across business segments and adequate incentivisation for risk management.Practical implicationsRisk management is an integral part of the decision‐making process and effective risk management can proactively help in overcoming the possibilities of the business failures.Originality/valueThe paper highlights the fact that knowledge of risk management in Indian companies is inadequate and sample companies hesitate to respond thinking that it may reflect inefficiencies.