Risk management means different things to different people. Its central purpose is to reduce the possibility of future events harming an organization. Its goal is very simple: To avoid risks and to balance positive and negative results over time so that asset base could be increased without increasing risk-levels and avoid project disruptions, undesirable sale of assets due to short-term liquidity needs, etc.

Traditionally, risk exposures were managed independently of each other. The Chief Financial Officers used to look after management of financial risks while the risk managers were managing the operational risks. At the apex level, the Chief Executive was managing the business and its continuity by drafting a strategy to compete in the market. In view of this multi-departmental approach and the resulting inter-departmental conflicts, the overall company-wide risk strategy was found to be sub-optimal. Over and above this, frequently changing regulatory demands and global competition are driving new markets and trading partners generating newer risks.

Against this backdrop, Multinationals, being driven by their increased concern for the return on the capital, stability and growth of future earnings, and shareholder's value, are giving a new meaning to risk management. They have been attempting to include the diverse perceptions of all stakeholders on what constitutes a risk to a company's business in their risk management practices. In the process risk managers are today facing a wide range of risks that demand new innovative solutions that support a more holistic approach to risk management. And, thus emerged a new concept: Enterprise Wide Risk (EWR) management.

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