Sebi proposes to extend risk management committee requirement to top 1,000 listed companies

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday proposed to extend the requirement of constituting a risk management committee to top 1000 listed companies from the current 500.

“Considering the multitude of risks faced by listed entities, risk management has emerged as a very important function of the board. The Covid-19 pandemic has also reinforced the need for a robust risk management framework,” Sebi said in a discussion paper seeking public comments by December 10.

The regulator said the risk management committee should meet at least twice in a year from the current practice of one meeting every year.

The committee should formulate a detailed risk management policy including a framework for identification of internal and external risks specifically faced by the listed entity, Sebi said.

The risks include financial, operational, sectoral, information, cyber security and sustainability specifically, environmental, social and governance related risks and impact.

The regulator said the committee should be responsible for taking measures for risk mitigation, systems for internal control and business contingency plan.

It must also ensure that appropriate processes and systems are in place to monitor and evaluate risks associated with the business of the listed entity and also review its policy on an annual basis.

The appointment, removal and terms of remuneration of the chief risk officer should be reviewed by the risk management committee, jointly with the nomination and remuneration committee.

The risk management committee would also have the powers to seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary, Sebi said.