Beyond Compliance: Evaluating Risk Detection And Early Warning Systems In Indian Corporate Governance
- IJLLR Journal
- Jul 7
- 2 min read
Junairiya T H, LL.M., Amity Law School, Amity University, Bengaluru.
Dr. Ashwani Singh, Assistant Professor, Amity Law School, Amity University, Bengaluru
ABSTRACT
India's corporate governance framework has evolved substantially over two decades, with the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 establishing a comprehensive framework of disclosure obligations, board accountability mechanisms, and audit oversight structures. Yet the recurring incidence of large-scale corporate failures—across manufacturing, banking, and infrastructure sectors—reveals a persistent disjunction between formal regulatory compliance and substantive governance quality. This paper interrogates that disjunction by examining whether compliance-oriented governance frameworks are structurally adequate to detect and pre-empt corporate risk, and by evaluating the potential of Early Warning Systems (EWS) and AI-enabled predictive governance tools to remedy the observed deficiencies. Employing a doctrinal and analytical methodology, the paper critically examines India's primary statutory and regulatory governance instruments alongside academic scholarship, regulatory consultation papers, and institutional risk governance research. The paper finds that while India's compliance framework has progressively strengthened formal obligations, structural features such as promoter dominance, information asymmetry, and ex-post enforcement orientation systematically impair early risk detection. Predictive governance tools—including machine learning models, continuous financial surveillance systems, and AI-assisted regulatory monitoring—offer meaningful capacity for identifying early warning signals before governance failures escalate into systemic crises. However, such technologies introduce their own governance challenges relating to algorithmic opacity, accountability gaps, and regulatory underpreparedness. The paper concludes that predictive governance can significantly strengthen corporate accountability in India, provided it operates within an appropriately calibrated legal framework characterised by transparency, human oversight, and responsible AI governance.
Keywords: Corporate Governance; Early Warning Systems; Artificial Intelligence; Predictive Governance; India; Companies Act, 2013; SEBI; Risk Detection
