Enterprise Risk Management at Polaris

Polaris believed that there was enough opportunity for the Indian software industry to continue to grow at impressive rates. But the company also recognized that future policies of the Indian government might have an impact on the company's growth.

Political instability in the domestic economy might affect Polaris' revenues. Liberalization policies, policies directed towards technology companies, policies related to foreign investment and/or currency exchange, all could change, resulting in an adverse impact on the business environment. Regional conflicts in South East Asia could disrupt the Indian economy and impair the company's operations.

Owing to the mission critical nature of most of the company's projects, client system failures caused at the site of implementation might cause clients to claim substantial damages against the company. While Polaris had taken efforts to limit the contractual liability arising out of such failures, client claims needed to be factored in appropriately, as they could damage Polaris' reputation and affect its revenues.

Polaris' problems in Indonesia were an indication of the type of unexpected risks, which could materialize.