'It's important at board level to have a strategic direction when looking at risk': Sandeep Parekh

At BT500 Wealth Creators Summit, two experts spoke about the complexities and dynamics of risk within the business sphere. At a session titled "Business of Risk", Dinesh Kanabar, CEO, Dhruva Advisors LLP and Sandeep Parekh, Managing partner, Finsec Law Advisors spoke about regulatory landscape in India and how they dissect the multifaceted nature of risks that enterprises encounter and both said identifying risks is a huge challenge. 

"Harvard Business Review said that there are three kinds of risks. Risks that are preventable, internal to organisation, an employee going rogue, something doing non-ethical, non-compliance of risks. Strategic risks that are about risk and reward and whether to stay invested or not. Environmental risks like a war breaking out, which is beyond the grasp of any organisation. Organisations need to put risks as top focus," said Kanabar. 

Parekh said, "It's important at the board level to have kind of strategic direction when looking at risk."

"Whenever a regulator is looking at a board of directors duty to the company they will always look at how your policies sound, did you act and beyond that don't want to penalise the company," he said.

"Board of directors are the only fiducaries in the world who have a protection called business judgment rule. Go ahead and make mistakes, you are not gonna be liable for your mistakes, so long as you are loyal and diligent," added Parekh.

The experts spoke on ease of doing business in India.  

"In 2022, a study was done on MNCs that either want to leave China or want to set up another base outside China and 76 such companies were identified. Out of them, 26 moved to Vietnam and 6 moved to India and that shows where we are. We have huge potential but it boils down to execution," said Kanabar.