So, what exactly is to blame for the collapse of iconic brands during the economic crisis? Sad state of corporate governance where risk management is at the bottom of priority, says the third edition of the joint study done by Asian executive-search firm Hunt Partners and market intelligence company ValueNotes.

The report, a first of its kind, highlights multifarious functionality errors with corporate governance, including lack of risk management processes, skewed remuneration structures and low levels of shareholder involvement.

The biennial report assumes significance as it comes at a time when the stock market watchdog, the Securities and Exchange Board of India (Sebi), is being lauded for Clause 49 of its listing agreement, which sets the standards of corporate governance. Though the move by Sebi has seen compliance by the corporate sector, many feel it has improved governance only on paper.

?In India, policymakers are shifting focus from legislation to a voluntary approach. The country has been rocked by scam after scam, tainting public and private companies across sectors. Policymakers have concluded that making blanket changes is not the solution. Lawsuits, CBI inquiries and widespread media criticism have led to extensive debates about the role played by independent directors and the extent of their liability in the recent governance failures,? says the report.

Risk management is increasingly seen as a key governance agenda, and needs more attention at the board level, finds the study. About 31% of the companies do not have their board?s involvement to systematically address corporate risk management. Nearly 61% of the directors feel that linking director compensation to risk and responsibility will have a high impact on improving board effectiveness. ?There needs to be an alignment between corporate strategy and risk-taking. Risk management needs to be tackled at the board level. Sadly, our survey found that risk management is not considered ?very critical? by over 70% of the respondents,? Sunit Mehra, managing partner with Hunt Partners said.

Arun Jethmalani, managing director at ValueNotes, said, ?The survey has revealed some stark facts. Most alarming is that while corporate India is aware of, and acknowledges the importance of self-governance, what we see on the ground is mere paper compliance, that of just ticking the boxes. The rules have to be followed in both letter and spirit if the status of corporate governance has to improve in India.?

The report goes on to say that limited talent pool is perceived as the biggest impediment in changing board structure. Around 25% of the companies do not have a fixed retirement age for the chairperson and non-executive directors. Also, there is no formal process for measuring board effectiveness. About 31% of companies did not have their board?s involvement to systematically address corporate risk management. It was further found that risk management is not considered ‘very critical’ by over 70% of the respondents.

Leadership development, succession planning, CSR and risk management continue to be low on the board priority list, finds the study, which further says that more than 50% of the directors surveyed said their boards hardly ever evaluate their own effectiveness. Among the boards that do conduct evaluations, a majority of them opt for self-assessment, says the study, adding that more than half of the respondents pointed out that their boards did not even have a formal process to evaluate their effectiveness.

Speaking about board composition, the study throws up a worrying fact, that the average percentage of women directors on company boards was extremely low at 4.6% for 2009-10, and has remained relatively constant over the past four years.

The figure is lower compared to countries like Canada, the US, the UK, Australia and Hong Kong, where the ratio of women directors ranges between 8% and 15%.

Standard Chartered Bank’s report titled ‘Women on Corporate Boards in India 2010? also had similar findings. According to the report, only 5.3% of directorships on BSE-100 companies are held by women.