Enterprise Risk Management Practices in India: A Case Study of Select Indian Companies

Abstract

Enterprise Risk Management (ERM) has grown to be a crucial tool for identifying, evaluating, and managing risks inside an organisation. ERM enables organisation to manage risks and reduce the possibility of business fraud and failure, maximising the value of stakeholders. ERM assists management in coordinating risk appetite and strategy, improving risk response, integrating the risk management perspective, enhancing cooperative governance, minimising operational surprises and losses, taking advantage of opportunities, and lowering unacceptable performance variability. This paper has been prepared to understand the ERM practices of firms in India and to analyse the relationship between ERM and Firm Performance. Four Indian Companies listed at BSE has been considered for an in-depth analysis of their ERM practices across 15 years i.e., from 2007-08 to 2021-22. The quality of the disclosures has been analysed based on the components of COSO framework by way of content analysis of the four companies for the period of study. The study finds that the disclosures in terms of quality of ERM practices of Infosys have been better than the other select companies both in overall terms as well as in terms of most of the components considered for the study. The study also finds that firm performance like ROA has a significant but negative relationship with ERM while in contrast EPS, also a measure of firm performance, has a significant and positive association with ERM practices of the firms.