Published on May 17, 2019
Enterprise Risk Management (ERM) framework helps establish risk boundaries within which the business operates, sets stakeholder expectations with regards to the risks and provides assurance through a comprehensive approach.
The need
As an Internal Audit department, Infiniti Retail developed a sharp focus on transactional controls within its organisation and basis learnings matured its processes. This was achieved by bringing cross-functional teams together and educating them on the need to have a standardised approach.
While the aforesaid ensured good governance and a robust internal control environment, there was a need felt to take this journey forward to review the company’s external environment. Further, the team also also thought of reviewing broader level risks, arising from the internal environment viz. strategic risks, financial risks, etc.
Best practice adoption
In mid-2016, a benchmarking activity on ERM was conducted among Tata companies whereby maturity levels of practices adopted by participating group companies were measured on the below parameters:
Thereafter, learnings from this activity were shared through a webinar by the Chief Risk Officer from Tata Power, followed by an in-person meeting by representatives from TBExG. This helped Infiniti Retail in assessing itself and planning a roadmap for its ERM journey.
Infiniti Retails’s Audit & Risk Management Committee Chairman, suggested referring to the risk management policy of Tata Chemicals.
Infiniti Retail adopted the aforesaid policy with certain modifications as suitable to the retail industry and business environment. Further, both the above enabled laying down a strong foundation for defining key principles of risk management, reporting structure, identification and assessment of risk.
Benefits
Though the practice is in early stages of adoption, but looking at the quality of the framework and the maturity levels reached in a short span, the team started making the best possible use of the framework, in the following ways:
- They were able to identify new risks, which emerged during the current year. Thereafter, mitigation plans were identified for the same, which will help managing the risk from early stages
- Similarly, out of the risks identified at the beginning of the year, risk rating for certain risks significantly reduced through continuous strengthening of mitigating actions and close monitoring by assigned stakeholders
- The team has also considered the high risk areas from their ERM while devising the annual strategy for FY19-20, which were being presented to the Board of Directors
As part of further improvisation, Infiniti Retail has started assessing its risks and mitigation plans objectively, to address the risk more maturely by ascertaining and focusing on areas with under-achieved scores.