"Over the past several years, corporate India has become much more engaged with and sensitized to Enterprise Risk Management." Explain briefly the significant challenges which Indian boards face in designing and implemen

Indian boards face significant challenges in designing and implementing an effective ERM system, which are as under: Effectively linking risk and strategy: Integrating risk management into the overall corporate strategy is a challenge for many India firms. The challenge is to have ERM system that encompasses a process capable of being applied in strategy setting across the enterprise. "Effective risk management is not about eliminating risk taking, which is a fundamental driving force in business and entrepreneurship." In other words, taking appropriate risk needs to be at the heart of corporate strategy. For this to happen, the board must understand and guide the company's appetite and ability to take risk and communicate the same to the company's risk management team. ERM programs must be developed with input from various functions in the organization, such as finance, legal, sales etc. Implementing cost-effective risk management for small and medium sized enterprises: While the costs of risk management failures can be high, designing and implementing efficient ERM can also be quite costly, especially for small and medium-sized firms. For example, hiring consultants or the necessary staff to develop stress-testing and early warning systems to alert the board regarding significant risks can be difficult to do in smaller companies. In addition, while larger firms can establish a chief risk officer' functions with direct report to the board, doing so is much harder for smaller companies. Addressing all major areas of risk: ERM requires a firm to take portfolio view of risk, board must consider how various risks inter-relate, rather than treating each business and risk individually. This is a significant challenge for many boards. Mitigating new risks: In India, many complex areas of risk have emerged in the last decade or so, which has made risk management particularly challenging. For example, some traditional areas of risk, such as political instability and strikes and unrest, appear to have subsided while others such as information and cyber security as well as terrorism and insurgency have increased substantially. Companies in wider variety industries have experienced the theft of data and sensitive information. For companies in major cities, the threat of terror attacks has become a growing cause for concerns, which can be hard to manage by the company itself. According to 2015 survey, the top five risks for Indian firms include: Corruption, bribery and corporate fraud Information and cyber security Terrorism and insurgency Business espionage and Crime