FICCI, GRMI Release Playbook On Risk Management ‘Model Risk Code’

Federation of Indian Chambers of Commerce - FICCI and Global Risk Management Institute are pleased to announce the release of the ‘Model Risk Code’ on Nov 24, 2022 at FICCI Federation House, New Delhi. The Model Risk Code is meant to ‘Enable Faster, Bolder, Risk-intelligent Decisions’ for corporates and be a catalyst to a resilient, agile and future-ready India Inc. The MRC is a practical playbook with best practices and guidelines relating to risk management. It is intended to equip corporates with an enabling tool to implement robust risk management practices. The Model Risk Code initiative is primarily authored by Subhashis Nath, Founder & Cheif Executive Officer (CEO) of Global Risk Management Institute with guidance from an 18-member Risk Taskforce led by M Damodaran, Former Chairman, Securities and Exchange Board of India (SEBI).  

Industry (FICCI) and Global Risk Management Institute (GRMI) partnered to release a practical playbook ‘Model Risk Code’ on risk management theories.    

“The MRC is intended to remove 6 Myths with the first Myth being that Internal Audit (“IA”) cannot extend itself to play the role of Risk Management function, as IA is the independent third line of defence while Risk Management needs to be owned and managed by the Business - first and second lines of defence.”said Subhashish Nath, Founder & CEO- GRMI, former SVP & Service Line Leader- Enterprise Risk & Compliance, Genpact. Im Subhaish Nath, Founder & CEO- GRMI

The playbook explains about the best practices and guidelines around risk management, covering two key aspects: key principles of risk management and implementation of risk management.  

It also covers how risk management is nuanced for MSMEs and for new-age companies that include internet-based companies and start-ups as defined by the Department for Promotion of Industry and Internal Trade.   

The target audience includes all those engaged in managing risk for their organisation including board members, risk management committee, CEO, CXOs, business unit/operating heads, chief risk officer (CROs), and business managers and all stakeholders who are directly involved in an organisation’s business operations or are interested in the organisation’s business, or can influence it including but not limited to employees, vendors, customers, lenders, government, regulators, shareholders, financial institutions, community, rating agencies, and industry associations.    

“I often held that the evaluating and addressing risk is a critical attention area for boards”, said Sidharth Birla, Past President, FICCI.   

“The Model Risk Code addresses entities of all sizes including non-listed and private limited entities and other bodies”, he added.   

Founding and Managing Partner, BMR Legal Consulting LLP, Mukesh Butani Says "Risk as a subject has and continues to undergo monumental changes due to influx of regulatory oversight and evolution of new business models. The Model Risk Code (MRC), first of its kind, is meant to serve as a definitive guide to business heads, regulators, students, and academicians. Penned by experts under the pupilage of business leaders, CFO’s, CRO’s, academicians, regulators, and experienced professionals, it’s an outcome of team’s efforts resonating their practical insights and experiences."

The playbook summarises that the board members should reinforce the need for robust risk management practices that are core to sustainable value creation for the organisation. It should demonstrate its commitment to investing in the requisite resources for robust risk management processes including people, technology, external partners, time, attention, training, and communication. 

"Today companies which want to grow at a fast pace need to have strong risk processes to help them achieve sustainable and profitable growth. To this end it is important that we develop a risk code which is a common language and framework. This is akin to the Corporate Governance Code which was brought in many years back and after many iterations became a Corporate Governance framework for the Indian Corporates. I can see the Model Risk Code (MRC) taking a similar trajectory. This is a start of journey which over a period of times can be embedded into regulation for all corporates." said Richard Rekhy ,Current Board Member, KPMG Dubai 

Ritu Chawala Kochhar- India Head, Spencer Stuart explained the need of a model risk code  "The risks modern organisations face have grown more complex, fueled by the rapid pace of globalization. A model risk code is a need of the hour and will help equip managements and boards with a holistic framework and proactive approach to managing risks in a comprehensive and consistent manner".

Industry applicability - The Principles chapter of the Risk Code is industry agnostic. However, the Implementation guidelines to be subsequently released will cover customised guidelines for different industries — Manufacturing, Retail/ FMCG, Services, Hospitality, Telecom, E-commerce, Banking & Financial Services, Insurance, Education, Healthcare, start-ups / new-age organisations.  

Click here for more information: https://indiariskcode.grm.institute/

For detailed coverage about the event and future updates, Look out for the next BW Businessworld magazine issue.