Risk management must be driven by the understanding of what is good for the corporate, said M Damodaran, Chairperson, Excellence Enablers and former Chairman, Sebi.

“The success of the risk code will be when people look at it, not as a direction or something that is mandated, but as the distilled wisdom of persons in corporate India and see how to apply that to their own corporate,” the former chairman said at the release of the FICCI — GRMI Model Risk Code on Friday. FICCI-GRMI Model Risk Code is a toolkit to sensitise senior officials and corporate boards on risk assessment and mitigation processes.

The Securities and Exchange Board of India (Sebi) mandates that the top 1000 companies listed must have risk management procedures. However, while releasing the Model Code, Damodaran said risk management could be a voluntary exercise for others. “I am not a great believer in something being drafted into law”, he said, adding, “if they don’t see the value, it might end up as one more tick box,” but whether it will add to corporate well-being is suspect. “Don’t mandate because mandating comes with a cost”.

On occasion, Sidharth Birla, Past President, FICCI, said evaluating and addressing risk is a critical attention area for boards. “Any framework that helps businesses take more informed and risk-intelligent decisions should be most welcome,” he said.

In this context, he added, the Model Risk Code addresses entities of all sizes, including non-listed and private entities, and can be of great significance in building risk maturity, should they choose to draw upon the Code. “This code will support boards as accountability increases with each passing day,” he said.

During the launch ceremony, Subodh Bhargava, GRMI Board Chairman, said the Code was going to be a toolkit to bring about a change in the mindset of corporate boards and senior officials, and make risk assessment and risk mitigation processes a part of their DNA.

Subhashis Nath, Founder, and CEO – GRMI, former Senior Vice President and Service Line Leader for Enterprise Risk and Compliance, Genpact, said there was a significantly increased expectation from the corporate world, which requires corporate India to be more resilient, agile, and future proof. He added, “the model risk code intends to be a playbook, a guide or toolkit, to ensure boards and CEOs have an effective enabler to embed risk into their DNA.”

Anita George, Independent Director, Piramal Enterprise and former Executive Vice President and Deputy Head of CDPQ Global, said that while the risk was always there, the pace, unpredictability, volatility, and the myriad types of risks that are coming at us are making us aware that we need to have someone in the organisation who is firefighting, not just on a day-to-day basis, but more strategically.

Richard Rekhy, Board Member of KPMG Dubai and former chief executive officer of KPMG India, noted that risk management was entirely about the business and has to be led by the CEO. Alluding to the Covid crisis, Rekhy noted that “post-Covid, the companies that bounced back faster are the ones that had better risk management practices.”

Mukesh Butani, Founding and Managing Partner, BMR Legal, Rajan Saxena, former Vice Chancellor of the SVKM’s NMIMS, and Ritu Chawla Kochhar, India Head, Spencer Stuart, were also present at the occasion.