Enterprise Risk Management at Tata Steel

Organizations, currently, operate in highly volatile, uncertain and complex environment. The dynamic business landscape warrants a robust risk management system that enables business identify material risks and demonstrate assurance of operational controls. The risk management process enables organizations to sustain and improve value during the business as usual scenario while future-proofing businesses to ensure business continuity and protect value proposition while adapting to multitude of external forces and events.

Tata Steel has deployed a structured enterprise risk management process, that’s deeply embedded within its divisional business units. The risk management process at Tata Steel derives inputs from global standards like COSO, ISO 31000:2009. Adoption of this approach goes beyond regulatory compliance and provides a framework to respond to ever-changing business landscape. The company considers enterprise risk management as an important management tool aimed towards developing a risk intelligent culture that supports decision-making process thereby improving performance. The integrated ERM approach with the framework aligned for Tata Steel Group Companies across geographies, promotes insights into risks across the portfolio of all business activities.

Risk management at Tata Steel is a two pronged (top-down, bottom-up), iterative process, which is dynamic in nature. The function has three levels of risk management responsibilities: Risk Oversight, Risk Infrastructure & Management and Risk Ownership. Risk Infrastructure is managed by Central ERM team, which helps in designing, implementing & monitoring common ERM framework across the organization. Divisions and Profit Centers are led by Risk Owners, who help identify, measure, monitor, review and report risks as per defined common framework. ERM team facilitates by providing an outside-in view to the Business Units (BU) for holistic risk identification, flags-off exceptions, highlights progress of implementations and status of key risks. Benchmarking of ERM processes & procedures is undertaken through interactions with CROs from organizations across the country and participation in various National & International risk conferences and training programs.

ERM process is an effective enabler in responding to fast evolving business scenarios. The unprecedented disruption and heightened economic uncertainty has reinforced the need for a mature ERM process. Tata Steel has been able to leverage its risk intelligence by recalibrating its operations in line with the evolving business environment . The risk management process has facilitated divisions to evaluate a range of outcomes through scenario planning exercise and prioritize mitigation plans accordingly. In order to counter its exposure to business cycles and pandemic-induced slowdown, Tata Steel continues to enhance its footprint by building a diversified portfolio of customers from a range of industries across the country. It has also ramped up exports in the interim and continues to focus on the de-commoditization agenda through entry into value added services and new materials business, etc. It is continuously working towards diversification in sourcing and expanding its vendor base from other geographies and developing internal supply chains to manage supply chain disruptions. Digital and climate change continue to drive the corporate agenda. Several measures like increased scrap usage, focus on scrap recycling as a distinct business area, carbon capture, etc., are being pursued to accelerate transition to a low carbon regime.

While implementing quick fixes to ongoing operations, there has been continued organizational focus on developing sustainable long-term risk management strategies to ensure business continuity and build immunity to deal with potential future black swan events.

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