In the modern age, risk management has become increasingly complex and challenging due to the need for rapid decision-making and the high velocity of data exchange
Leaders are primarily responsible for three key functions: creating a solid plan for the organisation, ensuring the necessary resources are available to execute the plan, and managing risks to stay on track with the plan or adapt to changing conditions. Among these, risk management is the only continuous function, as planning and resource allocation are typically periodic activities. However, it’s concerning that many CEOs may not be adequately trained in risk management, with some not even recognising their risk management responsibilities.
In the modern age, risk management has become increasingly complex and challenging due to the need for rapid decision-making and the high velocity of data exchange. Leaders often face pressure to make resilient, enduring decisions in a short amount of time, with data coming from various sources.
In countries like India, risk management is further complicated by a dynamic risk environment where risk levels can change rapidly. These shifts often have direct consequences for businesses and profitability. Additionally, India faces risks associated with specific events, such as national holidays, elections, and religious festivals.
Top Three Risks In India
The Top Three Risks In India For Business Are:
Technology Risks
The technology itself encompasses many diverse sub-risks. As our lives and businesses keep adopting further technological tools, this risk is likely to keep increasing.
Technology failure has been faced by everyone, right from the largest of the companies to the smallest entity, such as an individual user of technology. There are many examples when critical units, such as hospitals and power supplies, couldn’t operate due to technology failure.
At the same time, data and privacy are causing serious concerns. The main reason behind the data is the enormous utilisation of the data that can impact countries and individuals.
Protecting intellectual property rights (IPR) and preventing the misuse of IP have increased with the advent of technology.
The criminals in the cyberspace have not only enjoyed non-trackability but are also getting new-age tools like VPN, spoofing, etc. to detect them, which is more difficult. As per a report, cybercrime costs are expected to grow by 15 per cent per year and reach $10.5 trillion annually by 2025.
Business Disruptions
Disruption is the fastest-growing trend globally, and India is quite ahead of others. In fact, among risk management professionals, it is often discussed that India is the perfect ground for training on risk management due to the plethora of business disruptions. Indian businesses face disruptions of many kinds, including political protests, social unrest, outages of utilities, natural disasters, etc. The cost of such disruptions is very high, apart from the loss of reputation that is a product of business losses and the loss of faith of customers.
As per the Global Peace Index, communal violence alone brought a cost of $646 billion to India in 2020. India loses almost 9 per cent of its GDP due to riots. As per ASSOCHAM, the farmer protests in the Delhi area cost the economy almost Rs 3,500 crore per day.
If a company or country is part of the global supply chain, then it’s a must for them to implement mitigations to avoid being impacted by local disruptions.
Insider Threat
This is the most prominent problem, however, most denied as a concern. My favourite example is that Lord Ram also had to take the help of an insider to win against Ravana. The ever-increasing incidents of board room leaks, IP thefts, loss of commercial information, etc. are the root cause of the insider problem. In fact, even physical thefts take place with the help of insiders. The retail industry faces more than 90 per cent of inventory shrinkage due to insiders rather than shoplifting.
The tapestry of a competitive duel today may be economic in nature, but the victorious insights are still being achieved by gaining secrets and, more often than not, through insider involvement. In a growing economic regime, companies operating in the same environment often seek a peek at the future plans of their competitors to formulate their own strategy, hoping to gain an edge or a head-start, while governments also utilise their own insider network to be aware of tax evasions and other non-compliance issues.
New Age Mitigations
When developing a risk management strategy, consider the following recommendations to optimise your efforts:
