Over the last decade, the risk management practices in India's banking and financial services sector have evolved significantly. There have been major changes in how Indian financial institutions manage risks during the past decade. Before, people considered risk management mainly a requirement from regulators, but today it is fundamental to a company’s strategy, competitiveness and stability.

We can clearly see this transformation from new regulations. Risk management in the sector has been changed by the Reserve Bank of India’s Operational Risk Management and Resilience Guidelines introduced in January 2023. Banks should still keep key operations running smoothly through major problems, with guidelines for good governance, keeping the business going and planning for different events.

The RBI placing more emphasis on first-line risk ownership has transformed its approach. As a result, it becomes the duty of business units to handle emerging risks, but the Risk and Central teams act as guides by furnishing management solutions, rules and observation. Organizations must now start to consider risk when making all business decisions and their usual operations.

The Revised Regulatory Framework for NBFCs (October 2022) and the Revised Prudential Regulation Framework (September 2022) both stress that risks must be found and addressed throughout the entire company. They all point out why Indian financial institutions ought to help their people, procedures, IT and partner firms become more resilient.

Today, with the world’s situation being so unpredictable, resilience needs to be a basic approach for financial institutions to handle surprises, retain their customers’ trust and secure system stability.

Process Reengineering in Financial Institutions

Technology is not a cure-all, even though it is essential for fostering resilience and operational excellence. Our experience has shown us that a combination of technology, organizational alignment, and human-centered design is necessary for successful process re-engineering.

Organizations can easily fall into the trap of wanting to automate for no real need, so they must avoid doing this. Too much automation that does not fit customer preferences or staff skills may be a mistake, given that many Indian customers, including older and rural users, are still mostly comfortable with personal help.

The best results come from joining digital tools with service that treats people with empathy. The main focus of seamless service delivery should be winning customer trust and satisfaction, as well as achieving fast operations. Technology should be seen as something that supports good and scalable service models, not as an alternative to them.

Also, making a process transformation work means eliminating departed silos and encouraging people from different areas of the business to work together. Process improvements need to support the business, include risks and match compliance requirements, all the time keeping in mind what customers go through.

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The Path Ahead

Financial companies that rethink their risk policies and how they work will be most successful in uncertain times. Using agility and resilience in their business plan, they are able to deal with obstacles and retain customers’ trust for many years.

Even so, technology alone isn’t enough on its own. Organizations should operate with a focus on people, so that their developments address a variety of customer requirements and preferences. Firms that use risk management while always putting customers first will play a key role in shaping the financial sector’s future. They will set the rules for staying resilient, creative and successful as the financial sector changes.

About the Author

Rukkmani K Narayanan, Co-Founder and CEO, Prime Equation

Rukkmani K Narayanan, Co-Founder and CEO at Prime Equation, specializes in financial services, governance, and risk management. She works with banks, NBFCs, and fintech firms to streamline operations, ensure compliance, and integrate technology-driven solutions. With expertise in corporate governance, risk frameworks, ESG, and process optimization, Rukkmani develops strategies that align business goals with regulatory requirements. She also serves as a Board Advisory Member at Anudip Foundation, supporting financial literacy and digital skilling programs. Co-author of A Decade of Mandated Social Responsibility, Rukkmani is passionate about ethical leadership, financial innovation, and creating sustainable solutions.