RISK MANAGEMENT
Building Resilience Through Structured Risk Governance
At Eureka Forbes, effective risk management is integral to the Company’s strategy, governance framework, and long-term value creation. As Eureka Forbes continues to strengthen its business transformation and growth agenda, the ability to anticipate, assess, and respond to evolving risks remains fundamental to sustaining operational resilience, safeguarding stakeholder interests and achieving strategic objectives.
The Company’s risk management philosophy extends beyond regulatory compliance and is embedded within strategic planning, business operations, and decision-making processes. Through a structured Enterprise Risk Management (ERM) framework, the Company seeks to identify emerging risks at an early stage, evaluate their potential impact and implement appropriate mitigation measures. The framework is designed to remain dynamic, evolving continuously in response to changes in the external environment, industry landscape, regulatory developments, technological advancements, and business priorities. By fostering a risk-aware culture supported by robust governance mechanisms, clearly defined accountability, and continuous monitoring, the Company strengthens its ability to manage uncertainty while capitalising on opportunities that support sustainable growth.
Enterprise Risk Management Framework
The Company’s Enterprise Risk Management (ERM) framework is aligned with SEBI (LODR) requirements and leading risk governance practices. It provides a structured approach to identify, assess, prioritise, mitigate, and monitor risks that may affect the Company’s strategic, operational, financial, regulatory, and reputational objectives.The framework embeds risk management into business processes, ensuring risk considerations are integrated into strategic planning and decision-making. This enables management to assess risks alongside opportunities and make informed decisions within the Company’s risk appetite.
Risk management responsibilities are clearly defined across the Company. The Risk Management Committee provides oversight of the risk framework, reviews the risk profile and monitors mitigation effectiveness. Business and functional leaders are responsible for identifying, assessing, and managing risks within their areas and maintaining effective controls. This enterprise-wide approach promotes consistent risk evaluation, strengthens resilience, and supports proactive response to an evolving business environment. For further details, please refer to the Company’s Enterprise Risk Management Policy.
Risk Governance and Oversight
The Company has established a strong governance structure to oversee enterprise risks and align risk management with its overall governance framework. Risk oversight is led by the Risk Management Committee (RMC), whose composition closely aligns with the Audit Committee, promoting coordination across financial oversight, internal controls, and risk management. The Committee reviewed key enterprise, strategic and emerging risks, assessed changes in the risk environment, monitored mitigation progress, and evaluated the effectiveness of controls to ensure residual risks remained within acceptable levels.The Company’s risk assessment methodology evaluates risks based on impact, likelihood, and control effectiveness. Risks are then classified as High, Medium, or Low, enabling the management and the Board to focus oversight and resources on the most significant areas. Senior management attends all Committee meetings, providing updates on risk mitigation initiatives, emerging developments, and operational matters. This supports informed discussions, timely escalation of key issues and effective decision-making by the Board.
During the year, the Committee continued to play an active role in strengthening the Company’s risk governance framework through periodic review of the enterprise risk landscape and the adequacy of mitigation measures.
Enterprise Risk Management Process
The Company’s Enterprise Risk Management framework follows a structured and continuous cycle that enables timely identification, evaluation, and management of risks across the organisation.
Risk Identification
Risks are identified through a structured and continuous process that considers internal and external factors affecting the Company’s strategic and operational objectives. The process covers market, consumer and reputation, supply chain, information and cyber-security, people and product risks, along with emerging risks from changing business conditions. Root causes, interdependencies, and potential impacts are assessed to develop a comprehensive risk profile.
Risk Assessment
Identified risks are assessed based on potential impact, likelihood, and the effectiveness of existing controls. Both quantitative and qualitative factors are considered to determine risk exposure. Risks are then prioritised as High, Medium, or Low using a defined rating methodology, enabling the management to focus on areas with the greatest potential impact.
Risk Mitigation
For each material risk, the Company implements mitigation strategies aligned with its risk appetite and business objectives. Responses may include avoiding, mitigating, transferring, or accepting risks within defined tolerance levels. Mitigation measures are periodically reviewed and refined to address evolving business conditions and emerging risks.
Risk Monitoring & Reporting
Risk management is an ongoing process that extends beyond mitigation activities. Key and emerging risks are monitored through risk indicators and periodic assessments by the management and the Risk Management Committee. Regular reporting provides senior management and the Board with timely insights, supporting informed decisions and proactive risk management.
MARKET RISK
Inability to drive category growth and market share.
Mitigation Measures
- Offerings at various price points – from entry level to premium for both products and services.
- Launch of 2x filter life products across EWP portfolio.
- Significant investments have been made in R&D and marketing capabilities.
- Omni-channel presence, including strong go-to-market presence and access to consumer homes.
- Targeted actions on grey market operations and consumer education to garner a larger share.
CONSUMER / REPUTATION RISK
Risk associated with poor customer experience and its potential impact on the Company’s reputation.
Mitigation Measures
- Fortified extensive service network through infrastructure upgrades and expansion.
- Significant digital capability has been and continues to be put in place to give control to customers.
- Organisational interventions like “Customer Day” and extensive engagement with business partners to further drive the mindset of customer experience.
- Revamped incentive model launched to improve on‑slot performance.
SUPPLY CHAIN RISK
Risk arising from unexpected disruptions in the supply chain due to geopolitical or other external factors.
Mitigation Measures
- The supply network is derisked through a detailed vendor development roadmap.
- Robust strategic partnerships are in place and are being progressively enhanced.
- In-house and domestic manufacturing partnerships in key categories help in maintaining a healthy supply of products.
- Strategic up‑stocking of inventory considering the current geopolitical environment.
INFORMATION / CYBERSECURITY RISK
Risk associated with cybersecurity, including cyberattacks, ransomware, data breaches, inadequate disaster recovery, and non-compliance with evolving data privacy laws, such as the DPDP Rules.
Mitigation Measures
- A detailed disaster recovery process is in place.
- Several data security measures in areas like customer data, single sign-on or multi-factor authentication, call masking, etc. put in place.
- Cybersecurity awareness training has been initiated across the organisation.
- Appropriate cyber-security tools have been put in place.
- DPDP implementation programme in place.
PEOPLE RISK
Risk associated with people and cultural factors that may hinder our transformation initiatives.
Mitigation Measures
- Dedicated teams and capability building to support transformation initiatives.
- Large-scale workforce training and upskilling across the Company.
- Strong employee engagement through continuous leadership connect platforms.
- High-performance culture reinforced through rewards and ESOP participation.
- Robust human rights, ethics, and inclusion framework.
PRODUCT RISK
Risk associated with the inability to enhance product quality and meet evolving customer needs.
Mitigation Measures
- Design improvements, including new flow restrictors and flushing mechanisms, are underway along with regular review of performance metrics.
- Required monitoring is available for the validation of VAVE initiatives and NPDs to avoid potential quality issues in the marketplace.
- Structured approach towards identifying, managing, and reducing environmental impacts across operations (awarded GC-Mark “Green Company” certification for both manufacturing facilities).
