Large scale cyber-attacks, massive incidents of data theft, and extreme weather events are the top three risks for India Inc., says a joint study by Marsh, a global leader in insurance broking, and RIMS, the risk management society.
In fact, some 88 per cent of the survey respondents – representatives of C-suites, executives, and risk professionals across 19 industries – identified cyber-attacks as the top-most risk. This was followed by data fraud or theft (85%), volatile weather (84%), severe energy price shock (81%) and major financial failure (81%) among the other top risks for India Inc.
Titled ‘Marsh RIMS – State of Risk Management in India’, the report shed light on the maturity of risk management functions in corporate India. It addressed areas such as the top risks Indian corporates face, the maturity level of risk management in organisations, the key areas of risk management that require improvement, the risks of adopting emerging technologies, and key recommendations for risk executives.
The other risks identified among top risks include financial crises in key economies (80%), water crises (76%), shortfall of critical infrastructure (76%), failure of urban planning (72%) and failure of national governance (72%).
The same survey also looked at three separate time-frames in assessing risks: First, an already significant concern; Second, will be a significant concern in 1-3 years; and Third, will be a significant concern after three years.
A severe energy price shock emerged as the most significant concern (63%) among contemporary risks, followed by deflation in a major economy (53%) in 1-3 years, and massive spread of infectious diseases (59%) after a period of 3 years. The last concern was on account of India’s burgeoning population, rapid urbanisation, and increasing human mobility.
The interconnected dynamics of geopolitics, technological advances, global economic integration, social instability and climate change mean that the manifestation of one risk is increasingly likely to influence others. This interconnectivity and interaction of long-standing and emerging risks, is creating newer, unique and unpredictable risks making it even more difficult for organizations to identify risks. Hence, upgrading risk assessment methods is a priority for businesses in India given the rapidly changing risk landscape.
“Risk management practices among Indian companies have evolved over a period of time and today they are much better prepared to handle newer risks. However, having said that, there is definitely room for improvement particularly when it comes to quantifying the risks. Our report indicates that more can be done by organizations in identifying, assessing, and quantifying risks. Inability to model risks and budgetary concerns emerged as top barriers Indian organizations face. Upgrading risk assessment methods should be a priority given the rapidly changing risk landscape” said Sanjay Kedia, Country Head and CEO Marsh India.