For many people understanding risk and preparing for the same is unheard of and non-existent. Here we are talking about a nice educated class of people who hold high positions and handle a lot of money.

Like a friend says “Risk for these organisations is the quality of people they have hired to look after risk”. One risk manager says that risk for these organizations arises from the fact that they have employed such poor quality risk managers (Oh, they have fancy designation right from Risk officer to Director, Risk!)

It might shock some readers to know that for a long time (no clue whether it is now rectified) Citibank had no director level representation for risk. Shocking, I should say.

But after spending 20+ years in the financial services industry, do I understand risk? Not really.

I pride myself in choosing clients with whom I will do business – Hdfc mutual fund, Hdfc bank, Kotak, Icici, ING, SBI, Templeton, Hdfc standard life insurance, Icici prudential, …etc. However in a weak moment I did one small assignment for a Real estate marketing company based in the suburbs of Mumbai. My bill was a small amount. However for the assignment done in April, I am still awaiting for my payment!!

My father in law had a fixed deposit in Shriram Transport finance. When it came up for renewal I suggested he withdraw the same and put it in South Indian Co-operative Bank Limited. My logic was if there is a group whose MF has been stopped by SEBI it cannot be a good place to keep a Fixed Deposit or buy a life insurance product.

However South Indian Co-operative bank closed down (my FIL, as a senior citizen has recovered most of his money) but Shriram group is doing well, prospering and is paying on time.

However my father in law has stopped asking me for advice!! Luckily whether it was with a real estate marketing company or with my father in law, both the risks were managable because of the size of the transaction.