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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Risk Management

Meridian Components Ltd, a listed company with a large turnover, wants to decide who must frame and oversee its risk management policy under the SEBI LODR Regulations. Which statement correctly reflects the requirement for such a company?

The board bears responsibility for framing, implementing and monitoring the risk management plan, and the top 1000 listed entities by market capitalisation must also constitute a Risk Management Committee. Auditors, regulators or the Company Secretary alone cannot take over this board-level duty.

  1. AThe board must be responsible for framing, implementing and monitoring the risk management plan, and a Risk Management Committee must be constituted for top 1000 listed entitiesCorrect
  2. BOnly the statutory auditor is responsible for framing the risk management policy
  3. CThe risk management plan is framed by the registrar of companies and monitored by the stock exchange
  4. DRisk management is entirely delegated to the Company Secretary, with no board role

Explanation

Under SEBI LODR, the board is responsible for framing, implementing and monitoring the risk management plan. A Risk Management Committee is mandatory for the top 1000 listed entities by market capitalisation. The other options assign the duty to parties who have no such statutory role.

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