This issue comprises four papers. Finance theory suggests higher return comes with higher risk. The first paper, “Low Risk Anomaly: A New Enemy of Market
Efficiency”, by Rohan Rambhia, Mayank Joshipura and Nehal Joshipura, examines low risk anomaly in Indian stock markets. The sample for the study consists of constituent stocks of S&P CNX 500 index of NSE for a 11-year period starting from 2001 to 2011, and monthly rolling iterations are used to form low and high volatility portfolios. The findings of the study endorse the presence of low risk anomaly in Indian stock markets, as low volatility portfolio outperforms market portfolio as well as the high volatility portfolio on risk-adjusted basis. The results are consistent with the findings of other studies in the context of developed markets.

The second paper, “Managing Multiple Risks in Dairy Sector”, by Hrabrin Bachev, incorporates the interdisciplinary New Institutional Economics and presents a comprehensive framework for analyzing risk management in agrarian and dairy sector. Most of the risk management studies in agrarian and dairy sector focus on the technical methods and the capability to perceive, prevent, mitigate, and recover from a particular type of risk, and they largely ignore a significant human nature-based (bounded rationality, opportunism) risk, critical factors for the managerial choice such as the institutional environment and the transaction costs, and diversity of alternative (market, private, collective, public, and hybrid) modes of risk management. This paper specifies the diverse (natural, technical, behavioral, economic, policy, etc.) types of dairy risks, and the (market, private, public and hybrid) modes of their management. It also defines the efficiency of risk management and identifies (personal, institutional, dimensional, technological, and natural) factors of governance choice. It presents stages in the analysis of risk management and for the improvement of public intervention in the risk governance; and finally, it identifies and assesses the efficiency and prospects of major modes for risk governance in the Bulgarian dairy sector.

The third paper, “Ownership Effects on Credit Risk Management Strategic Decisions: Evidence from Indian Banking Sector”, by Anju Arora, investigates the impact of bank ownership on Credit Risk Management (CRM) strategic decisions on the basis of primary data regarding CRM strategic decisions of 24 public sector banks and 11 Indian private sector banks. The study observes that CRM strategic decisions are not significantly influenced by bank ownership, except with regard to the decision regarding the unit responsible for framing CRM policy. Apparent variations in strategic decisions are observed between public sector and private sector banks with regard to some issues. The study concludes that public sector banks prefer centralization of authority in strategic decision making, and also identifies the relatively weak areas that the sample banks should focus upon to strengthen their CRM framework. Thus, the study contributes significantly to the ongoing debate on the impact of bank ownership on risk management practices.

Over the years, the general insurance companies have been undertaking extensive risk management activities to safeguard the investor as well as investment. In the present-day scenario, the two aspects which are of great importance to the general insurance industry are: firstly, the opportunities in the Indian general insurance market and the resulting focus of players on achieving business growth, and secondly, the ongoing process of calibrated de-tariffing. Though de-tariffing has provided the players with significant opportunities in tapping markets and in coming times may provide even more opportunities, it has placed the onus of correct pricing on the players themselves. This has resulted in players’ preparing and emphasizing more on identifying risk parameters and pricing products based on risks. An efficient risk assessment and management in general insurance industry is very important due to the entry of private players, corresponding policy changes and the present-day fact of unprofitable books and erosion of capital resulting from unmanageable claim ratios. The last paper, “Risk Management in General Insurance Business in India”, by T Joji Rao and Krishan K Pandey, identifies the risks which the insured and the insurer are subject to, especially in India, and the mechanism through which these risk complexities are effectively managed.

-Nupur Pavan Bang
Consulting Editor