The study explores the factors affecting the management of risks in Indian corporations. Very broadly, the effective implementation of enterprise-wide risk management (ERM) can be understood using three elements namely, Enabling factors in the organization; Practice of ERM; and Effects of ERM. Each of the elements have been discussed in literature; however, a comprehensive linking of the elements is desirable. During the present study, perception of a sample of 106 senior executives about more than a dozen ERM practices and enabling factors was measured using a questionnaire.
The ERM practices can be explained with the help of three principal components-Structure for Risk Management; Record keeping of Risk Management and Activities of Risk Management. Statistical tests show that there are variations in practices between public sector and private sector. Responses from executives from service sector about practices in risk management showed a clear superiority over executives from other non-service sectors. Further, several enablers, such as corporate planning and review, MIS and ERP, internal audits, quality management and organization culture are postulated for each component. To practicing managers, the study suggests to strengthen the respective enabler; as well as to adopt practices from services sector and public or private sector enterprises for a successful implementation of ERM in their organizations.
Enterprise Risk Management, Public and Private Sector Comparison
