‘Risk management is a collective responsibility’

Risk management cannot be the sole responsibility of the board members of a company and has to be shared by everyone in the organisation, said Deepak Parekh, Chairman, Housing Development and Finance Corporation (HDFC). His remark comes against the backdrop of banks facing criticism over lax risk management practices, resulting in a sharp rise in non-performing assets over the last three quarters.

“Risk management cannot be the sole responsibility of the board of directors,” Mr. Parekh said at a CII event on Monday. “The concept of risk management has to be driven across the entire organisation and it has to percolate down to all levels.”

Calling for a culture of risk mitigation among employees, he said sensitisation came when employees felt empowered and responsible in their area of work. “Risk management is a collective responsibility and cannot be an isolated activity,” he said.

The veteran banker said risk management systems would have to undergo unprecedented change as more organisations embraced digitisation and added that effective risk management was based on good corporate governance and rigorous internal controls.

He also said that from a macro-economic perspective, the country was in a stronger position. “The country is demonstrating immense growth potential helped by a strong leadership,” said Mr. Parekh.

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