The years from 0 to 7 are crucial years in a child’s life. The years from birth to age 7 are decisive because this is a period of rapid brain development and physical development where nervous system is growing at an incredible rate and setting the foundation for future learning, behaviour, and strength. During this period, children build critical skills in areas like language, motor function, and social-emotional development. Children don’t forget traumas throughout their lives which take place in this delicate formative years. Their experiences and environment play a significant role in shaping their life potential till end.

Erick Erickson is a German American psychologist and psychoanalyst. Erikson’s theory of psychosocial development proposes that personality is shaped through eight stages across the lifespan, with each stage presenting a unique psychosocial crisis that must be resolved. Successfully resolving these conflicts, such as “Trust vs. Mistrust” in infancy or “Autonomy vs shame” and “Initiative vs. Guilt” till 7 years leads to a healthy personality and the development of basic virtues. Failure to resolve a crisis can result in difficulties in future stages, while success provides a foundation for continued psychological growth.

0 to 18 months is called Trust vs Mistrust

During this time, infants depend entirely on caregivers and learn to either trust the world based on constant love and caregiving. If an infant misses this it develops a suspicious view due to neglect or inconsistency in caregiving.  Successful navigation of this stage leads to the development of a sense of hope in the infant. Newborns use their sense of touch to bond with caregivers, they communicate needs though cry, and sounds like cooing, gurgling, babbling and explore the world by feeling shapes, textures, and temperatures. This sense is crucial for early development, helping them to learn about objects, develop body awareness which help them to regulate their emotions.

Autonomy vs. Shame and Doubt (18 months to 3 years)

Autonomy is the will to accomplish things independently and do things on our own. This developmental stage occurs during early childhood. If children are over protected or neglected the feeling of inadequacy and low self-esteem enters their personality. A successful outcome results in the child having a sense of self-control and self-worth.  Children naturally start holding things and walking with support between 9 and 18 months, a skill known as “cruising”. They usually begin to walk independently between 12 and 18 months, with many taking their first steps around 12 to 15 months. By 18 months, most toddlers are walking, and by 18 months, they can typically walk independently. This gives them the feeling of autonomy. Children seek independence and exploration through play, which helps them develop new skills and express emotions. They seek to do things by  themselves, learn through imitation, and are developing language, motor skills, and social understanding. This age is characterized by curiosity, a desire to be more self-sufficient, and growing communication abilities. When they are neglected by caregivers, they feel frustration and throw tantrums.

Initiative vs. Guilt (3-6 years)

During this phase of the children’s life, they assert more control over their environment through play and social interactions, leading to a sense of purpose and initiative when encouraged. If their actions are too much criticized or controlled, they develop a sense of guilt complex, causing them to become hesitant and fearful of taking lead or command in their lives and future. This stage is called pre-school. During this stage of life children learn to assert themselves and take control over their world through play and social interactions. Successfully navigating this stage leads to a sense of initiative, confidence, and purpose. When children are overly criticized or controlled, it leads to self-doubt and hesitation in their future endeavours. 

7 years onwards, children learn to become independent, develop a sense of purpose by taking initiative, and build self-confidence through developing skills and a sense of competence. Successful navigation of these stages builds a strong foundation for a healthy personality and leads to virtues like will, purpose, and competence.

children who don’t receive adequate parental support often struggle to build confidence. This lack of support can manifest as conditional love, criticism, or overprotection, which teaches children that their worth is not inherent, or that they are incapable of handling challenges, leading to low self-esteem and anxiety. A foundation of warm, caring, and unconditionally loving parents helps children feel secure, enabling them to explore the world with a stronger sense of self-worth and resilience.

Lack of parental support impacts confidence of children in education. It can lead their behaviour and social skills. This lack of support can result from factors like parental time constraints, low self-efficacy regarding academic help, lower socioeconomic status, or language barriers with schools. It can create lower academic performance. It can also lead to school dropout. 

Love and appreciation are most important at this stage of child’s growth.  When a child doesn’t feel loved or constantly feels like a burden, it leads to shame and low self-esteem. Not being praised for efforts or unique qualities can discourage creativity and unique thinking. When parents tell their child they are not as good as a sibling or friend can make them feel inadequate. Constant mockery of their attempts can also make them afraid to try new things. It’s very dangerous. Parents don’t realise this. Consistent issues like perceived favouritism, inconsistent discipline, and insufficient guidance directly fuels sibling rivalry. When children don’t feel seen, valued, or secure in their parents’ love, they may compete for scarce parental attention and resources, leading to resentment and conflict.

In case of overprotection or constant shielding a child from all challenges or failures may seem helpful, but it can lead them to feel anxious when they encounter stressful situations later in life because they haven’t learned to cope. Even when parents micromanage or control every decision of child, it prevents a child from developing independence and the ability to make their own choices.

Conclusion

My own study and experience have taught me to those children who received unconditional love  develop a strong sense of self-worth. The feeling of security helps them to explore and take risks. Widespread psychological research confirms that an insecure or traumatic childhood has profound and lasting negative effects on an individual’s adulthood, often weakening their ability to form healthy relationships, manage emotions, and achieve their full potential even as adults. Callous parenting can manifest as low self-esteem, difficulty with intimacy and relationships, and increased risk for mental health issues like depression, anxiety, and substance abuse in adults. Children who internalize feelings of worthlessness from their experiences can develop a false self and a deep sense of emptiness.

It is always advisable to be ready for global financial crisis and for sound and comprehensive risk governance. Board members and senior executives of banks need to have an inclusive view of risk control and far-reaching value creation. They must be clear on how risk categories are interconnected to the economy, capital allocation and the value of the business.

A risk is defined as an unplanned event with financial consequences resulting in loss or reduced earnings. Therefore, a risky proposition is one with looming loss. Risk stems from uncertainty or unpredictability of the future. In a commercial venture risk generates profit or loss depending upon the way in which it is managed. Risk can be defined as the instability of the potential outcome.  Risk is the possibility of something adverse happening.

Risk management is the process of evaluating risk, taking steps to reduce risk to tolerable level. Thus, we can say that after the risks are identified, risk management attempts to lessen their effects.  For example, we buy insurance to lessen financial risks. Also, sometimes when people visualize too many hurdles in a project, they re-plan the whole project.

Following are some common risks occurring in the banking industry:

Credit Risk:  The main risk under this category is the risk of non recovery of loan and the risk of lessening in the value of asset.   Banks face credit risk when customers repay loans by making the pre-payment, thus resulting in loss of opportunity to the bank to earn higher interest income. When banks give huge amount of loans to a single borrower, or to a single industry or to a single city, state or country risk arises due excess exposure.  In regards to excess loans given in a country, the element of country risk arises due to losses in foreign exchange reserve or unfavorable political or economic situations in the country or its neighboring country.

While the definition of credit risk sounds simple and straight forward, measuring it is not so simple.  Some examples are poor or falling cash flow from operations which is often needed to make the interest and principal payments, rising interest rates, changes in the nature of the marketplace such as a change in technology, an increase in competitors, or regulatory changes. The credit risk associated with foreign bonds also includes the home country’s sociopolitical situation and the stability and regulatory practices of its government. Rating agencies like Moody’s and Standard & Poor’s analyze credit risks on various securities.

Interest Rate Risk: This risk arises due to fluctuations in the interest rates.   It can result in reduction in the revenues of the bank due to fluctuations in the interest rates which are dynamic and which change differently for assets and liabilities.   Interest rates are market determined and banks have to fall in line with the market trends even though it may suppress their Net Interest margins. Interest rates depend of economic growth (demand and supply of money) fiscal policy (in a booming economy, many firms need to borrow funds to expand their plants, finance inventories and even acquire other firms). Consumers might be buying cars and houses. That need keeps the demand for capital at a high level and interest rates higher than they otherwise might be) monetary policy (Central banks modify the money supply to try to manage the economy and control inflation. If a government loosens monetary policy, this means that it has “created more money”) another key factor for rate fluctuation is inflation. Investors try to preserve their “purchasing power,” during period of high inflation as they get higher interest rate on their investments in the shortest period of time.

Liquidity Risk: Liquidity is the ability to meet commitments as and when they are due and ability to undertake new transactions when they are profitable. Liquidity risk may derive due to net outflow of funds arising out of withdrawals, non renewal of deposits, non-recovery of cash receipts from recovery of loans, conversion of contingent liabilities into fund based commitment and increased sanctioned limits.

Foreign Exchange Risk: Banks face risk which arises due to foreign exchange. Foreign Exchange risk arises when a bank holds assets or liabilities in foreign currencies and impacts the earnings and capital of bank due to the fluctuations in the exchange rates. No one can predict what the exchange rate will be in the next period, it can move in either upward or downward direction regardless of what the estimates and predictions were. This uncertain movement poses a threat to the earnings and capital of bank, if such a movement is in undesired and unforeseen direction. Foreign Exchange Risk can be either Transactional or it can be Translational. When the exchange rate changes unfavorably it give rise to Transactional Risk, as the name implies because of transactions in Foreign Currencies, can be evaded
using different techniques. Other one Translational Risk is an accounting risk
arising because of the translation of the assets held in foreign currency or abroad.

Regulatory Risks:   Regulatory risk is the risk of a change in regulations and law that might affect the banking industry/ a particular sector. Such changes in regulations can make significant changes in the framework of an industry, changes in some clause regarding lending etc. Change in laws and regulations materially impact a security, business, sector or market. When a change is made in law or regulations made by the government or a regulatory body it can increase the costs of operating by banks; it immediately affects the depositor’s and borrower’s behavior. It reduces attractiveness of investments and also changes the competitive landscape.

Technology Risk:  This risk is associated with computers and the communication technology which is being increasingly introduced in the banks.  Banks face risk of obsolescence and   the risk of losing business to technologically strong financial institutions. A global survey conducted by Deloitte Touche Tohmatsu Limited (DTTL) confirms that there are big challenges on the operational risk and technology side such as cyber threats. The acceleration of speed in the capital markets and overall risk management issues, are bothering the financial institutions such as banks. Technology or operations risk software; technology risk is often lumped under the label “operational risk.”

Market Risk: This is the risk of losses in off and on balance sheet positions arising from movements in market prices.

Strategic Risk: This is the risk arising out of certain strategic decisions taken by a bank for sustaining itself in the present day scenario  for example decision to open a subsidiary may run the risk of losses if the subsidiary does not do good business.

“Basel III” is a comprehensive set of reform measures in banking prudential regulation developed by the Basel Committee on Banking Supervision to strengthen the regulation, supervision and risk management of the banking sector. The measures aim at improving the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source may be, to improve risk management and governance and to strengthen banks’ transparency and disclosures. Basel III has provided a framework for stricter and better capital quality, risk coverage, measures to promote the build-up of capital that is unseen in periods of crisis or boom. Secondly, it introduced the ratio of leverage (>=3%) and reconsider the raking system. These changes aim to raise banks’ capability of facing systemic shocks due to economic crisis.

In 1963, Milton Friedman – an American Economist and Statistician also known as the free-market philosopher described corporate social responsibility as “fundamentally subversive”, writing that corporate responsibility is the pursuit of personage interest of an organization to survive in an uncontrolled market. He also said that firms do not exist in vacuum.

Organization will grow bigger and stronger in proportion with the rise of community standards.  Stakeholders are increasingly demanding information regarding an organization’s environmental, social and economic impact on society. Inclusive growth is a multidimensional concept that needs considerable commitment from business organizations. Theoretical and empirical analysis indicates that firms can strategically engage in socially responsible activities to increase private profits. While a firm gets noticed for its social efforts, the firm can obtain additional benefits such as enhancing the firm’s reputation and the ability to generate profits by differentiating its product, the ability to attract more highly qualified personnel or the ability to extract a premium for its products.

In India around Rs 22,000 crore is expected to be poured into the social sector from 2015 onwards as Indian business houses ramp up CSR funding. Under the Companies Act, 2013, which stipulates companies with a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or a net profit of Rs 5 crore to spend at least 2% of their average net profits made over three preceding years on CSR programes.

Many organizations are staring at the inadequacy of the CSR initiatives they had been flaunting over the years. Till now, many companies kept postponing their CSR funding. After an initial phase of indifference and, later, even sly attempts by a few at gaming the rules  fitting in what they are doing currently as CSR or looking for loopholes to avoid doing what they ought to be doing, companies are now preparing for a new era or a new genre of CSR interventions. On the flipside, the mandatory interventions of government will spoil scene – companies which used to spend much more on CSR may now get away spending less; this is just a thought.

At the moment, CSR or corporate social responsibility is an ever hotter topic. The Economist Intelligence Unit finds CSR becoming rising corporate agenda not only in the US, UK and China but globally. Everyone has an opinion on it. It is a hot topic in Commerce and Management lectures.

CSR has a big role to play in enhancing corporate image. A research conducted by McKinsey found that 95 per cent of CEOs felt that society has elevated expectations from businesses in regards to social responsibilities today than five years back. Consumers prefer buying products and services from companies supporting worthy social cause. CSR has multidimensional effects on a firm’s existence in society.

Risk Management: Commitment in CSR activities help organizations to manage emerging social risks which at times emerge as an offshoot of their operational activities; when the weather is bad, and when things go wrong corporate can influence the perception of people at large in society. Corporate usually get clean chit from the consumers, community, regulators, employees and the suppliers.

Brand Positioning: Consumers usually like to get associated with a company, which is ethical and has a positive image; many companies are becoming innovative while contributing to social cause. P&G’s CSR program ‘Shiksha’ is an integral part of their global philanthropy program. It is based on of the theme ‘Live, Learn and Thrive’. Shiksha has helped 2,80,000 underprivileged children access education. The programe is built and supported over 140 schools across India in partnership with many NGOs. The advertisements of P&G state that when P&G products are bought, some portion of the price paid for it goes into their Shikha initiative.

CSR increases ability to attract, motivate and retain employees: CSR helps companies to attract good employees. With Gen Y (called also millennial) making up more of the modern workforce, it is becomes important to pay attention to what they think about an organization. Research has found that 88 per cent of Gen Y (children born between the years 1980 to 2000) chose employers based on strong CSR values; it also showed that 86 per cent would consider leaving if the company’s CSR values no longer met their expectations. Business schools, like New York University’s Stern Business School, added courses related to CSR to keep up with their students’ rising demand. The Gen Y is known as responsible corporate citizen with sensitivity towards social and environmental issues. Therefore, a good corporate image helps employees and communities assist the corporate in achieving its Vision and Mission, as they all feel alike and contribute towards a common goal. According to Forbes, the 10 companies that are best at CSR are Microsoft, Google, Walt Disney, BMW, Apple, Daimler (Mercedes-Benz), Volkswagen, Sony, Colagte Palmolive and Lego. All of these firms attract young and enthusiastic workforce.

Investors like investing in these firms: There are many financial institutions globally, which have made it part of their policy to study the CSR activities of the company before investing. M&A decisions are also taken after consideration of CSR and Sustainability activities, even if it makes perfect economic sense for the investors.

CSR Boosts Corporate Image: It allows the company to have certain respect in the society among its stakeholders. Companies that implement CSR, like Unilever with its sustainable living plan, have enjoyed increased growth and profits. I would love to quote here how TNT has used its core business to help people in disasters. Through its CSR programe which is established at its Amsterdam headquarters, 50 designated employees are always on call to intervene anywhere in the world at 48 hours’ notice. The programme was established based on the company’s strong internal culture that places an emphasis on giving back to society. Due to their access to transportation and logistics, the cause became an easy fit. Employees have responded to over two dozen emergencies, including the Asian tsunami in 2004, since its inception.

A survey was recently conducted by Reputation Institute which is a global research institute for carrying surveys and research. Their surveys enable business leaders to take more confident business decisions that build and protect the business image globally. Reputation Institute recently conducted a CSR pulse survey globally, which found that CSR was responsible for more than 40 per cent of a company’s reputation and 42 per cent of people based their feelings about a company on the firm’s CSR. About 31 per cent of global consumers believe businesses should change the way they operate to align with social and environmental needs.

Another study shows that nine out of 10 consumers want companies to go beyond the minimum standards required by law to operate responsibly and address issues. 53 per cent of workers think that they like to contribute to a job which can make an impact on social wellbeing. And, such a job makes them happier. About 35 per cent would even take a pay cut to work for a company committed to CSR. Another study found that the more actively a company pursues worthy environmental and social efforts, the more engaged its employees are.

So that is a strong indication that CSR is not simply a superficial matter, but has a solid impact on consumers, employees and communities. There is a concrete rise in awareness of CSR and real demand for it. Greater than any strategy, CSR can give business a competitive advantage while also making positive changes to the community and the environment.