(L-R) Mr. Sandeep Goradia - Chief
Corporate Solution Group, ICICI Lombard, Mr. Hersh Shah, CEO - IRM India
Affiliate and Mr. Gaurav Arora - Chief UW, Claims & Property, ICICI Lombard
- Risk Culture needs a big focus and needs to be
owned and driven from the top of the organization.
- India Inc. grapples with growing concerns over
cybersecurity, talent management, climate change, legal/regulatory and
macroeconomic risks
- Risk Management processes improve but full
preparedness lags even for top risks.
- Big red flag on risk disclosures in annual
reports.
Mumbai, October 03, 2024 :
As India progresses toward becoming a developed nation under the Viksit
Bharat 2047 program, it maintains rapid economic growth. This progress,
amid a complex risk environment, presents both opportunities and challenges for
Indian industries. A strong risk culture will enable an organisation to
confidently pursue its objectives by taking calculated risks and effectively
managing potential threats and hazards.
India
Risk Report 2024 by ICICI Lombard and IRM India highlights the crucial need for
embedding a risk culture into organizational strategies. The report emphasises
a simple A-B-C approach for understanding the “Risk Culture” of an
organization. Attitudes of individuals and groups shape their Behaviours.
Over time, these repeated behaviours form the Culture, which in
turn influences the attitudes and behaviours within the organisation.
This
report is a timely reminder of the importance of proactive risk management. It
assesses the self-evaluation of processes and cultural standing within Indian
enterprises, based on a comprehensive survey of risk perceptions, management
practices, and cultural aspects. It equips businesses with actionable insights
to navigate the complex risk landscape and unlock opportunities for sustainable
growth.
The comprehensive study, combining primary and
secondary research, incorporates valuable insights from business and risk
leaders across various fields. This report aims to enhance our collective
understanding and management of risks while promoting a resilient
organizational culture grounded in effective risk practices. It examines risk
disclosures from over 500 Indian companies and more than 50 global companies,
based on their annual reports for years 2022 and 2023. The quantity and quality
of these disclosures provide insights into the prevailing risk culture within
these organizations.
Key Findings:
- Risk Maturity: Mature organizations ensure
that all employees can identify risks within their areas of
responsibility. According to survey responses, there has been a marked
improvement in this aspect compared to the previous year. Still 42% of
organizations still expect the Board or the Risk department to identify
risks.
- Risk Culture: Measuring risk culture
presents unique challenges due to its intangible and subjective nature.
Despite this complexity, our research team has developed a risk culture
scoring system (0–100) to benchmark organizational resilience. Our
findings indicate that only 16% of businesses score above 60, with a mere
6% achieving scores between 80-100.
- Top Risks: Cybersecurity, technology,
and talent shortages have emerged as pressing concerns across all sectors.
As businesses increase their reliance on digital platforms, the risk of
cyberattacks has grown significantly, while the challenge of hiring and
retaining skilled talent continues to escalate
- Mid-size
companies: This year's report also emphasizes the
importance of risk in mid-sized enterprises, which form the foundation of
the Indian economy and account for nearly one-third of India's GDP and
half of our total exports. Overall, mid-sized companies have shown
significant evolution over the past few years.
- Expert
analysis from 10 industry leaders and 5 risk experts: Our
expert contributors and key external stakeholders, who have accumulated
years of experience navigating complex risk landscapes across diverse
fields, provide these strategies, offering a comprehensive perspective on
achieving sustainable growth and managing complex risk landscapes.
Sandeep Goradia, Chief - Corporate Solutions
Business at ICICI Lombard,
states "Risk perception across industries is evolving at an unprecedented
pace. Sectors that were once considered risk-averse are now confronting new and
complex challenges, driven by the increasingly dynamic and interconnected
nature of the global risk landscape. The rise of cybersecurity threats, coupled
with talent shortages and economic uncertainties, has transformed risk
management from a strategic consideration to an operational imperative. In
today’s environment, organizations must adopt a forward-thinking approach to
anticipate and navigate these emerging threats. Insurance plays a pivotal role
in this framework, offering both financial protection and a strategic buffer
against unforeseen disruptions. Our collaboration with IRM enables us to
deliver in-depth insights and actionable strategies that not only address
immediate risks but also foster long-term resilience. By integrating risk
management into the core of their operations, businesses can not only safeguard
their future but also capitalize on opportunities that arise even in volatile
conditions."
Hersh
Shah, CEO, IRM India Affiliate and India’s Youngest Enterprise Risk Expert, said “As India charts its course towards becoming
a developed nation under the Viksit Bharat 2047 initiative, it finds itself at
the intersection of immense opportunities and intricate challenges. The dynamic
landscape of business and risk demands a new level of agility and foresight. It
is within this context that we present the second edition of our report,
"Building Resilience: A Comprehensive Analysis of Risk Culture in India’s
Corporate Sector,” with ICICI Lombard. The second edition delves deeper into
the essence of risk culture, a crucial yet often overlooked facet of
organisational health. Our commitment to understanding and enhancing risk
culture stems from its profound impact on an organisation's ability to prepare
for evolving scenarios, navigate uncertainties, and leverage opportunities
effectively.”
Key
Takeaways:
- Top Risks in Focus:
Cybersecurity threats and talent shortages are becoming key concerns
across sectors. As businesses increasingly rely on digital platforms,
cyberattacks have escalated, presenting a critical risk. Furthermore, many
organizations are finding it difficult to source and retain skilled
talent, a trend likely to intensify as the labor market becomes more
competitive.
- Changing Perception of Risk: The
report reveals a shift in how some sectors perceive risk. BFSI and
Services were low-risk last year and are seen as riskier as they face
complex challenges like macroeconomic pressures and cybersecurity, whereas
Energy/Utilities and Pharma, which were high-risk last year, are beginning
to address risks related to digital transformation. However, Manufacturing
and Distribution is at the same lower level both years, so it’s a
constant.
- Risk identification: As
per the trends, we see that risk identification among all employees rose
by 6% from 26% in 2023 to 32% in 2024, which indicates increased ownership
and responsibility. Identifying "black swan" and "gray
rhino" events (that refer to unexpected and foreseeable catastrophes,
respectively) is now being looked at as a significant contributor to an
organisation’s success.
- Risk Management and Insurance:
Furthermore, the report highlights that businesses are increasingly
turning to loss control solutions and insurance to mitigate key risks. For
cybersecurity, over 47% of respondents have adopted loss control measures,
while an equal percentage have chosen insurance to manage their exposure.
Technology risk is mitigated by 71% of organizations through loss control
efforts, while 66% manage legal and regulatory risks. Fire hazards remain
the most insured risk, with 70% of businesses covered. However, there is a
significant gap in managing climate change risk, as 37.5% of companies
still lack any form of risk solution, indicating an area where further
insurance and risk management efforts are required.
- Strengthening Risk Culture: A
key theme in the report is the importance of fostering a strong risk
culture within organizations. The survey shows that many businesses are
still struggling to instil a culture where risk management is part of
everyday decision-making. Companies across sectors must prioritize
building a risk-aware workforce to improve their overall resilience.
- Risk Disclosures: The
dedicated chapter on risk disclosure analyzed 521 listed Indian companies
reveals that only 3% of respondents maintained consistent risk disclosure
over two years, serving as a wake-up call for Indian organizations.
Effective risk disclosure requires a top-down approach, where the tone is
set at the top, and the board is held responsible for driving risk culture
throughout the organization.
While solid risk management processes and advanced
technology are essential for risk management, a strong risk culture is also
critical. This culture must empower everyone in the company to recognize,
identify, and manage risks.
The self-assessment of risk culture, combined with
the risk disclosure analysis, highlights the urgent need to enhance risk
culture within organizations. This research will benefit industry risk leaders
and all Indian enterprise stakeholders. It will help them identify the key
areas that require attention to become risk-intelligent and risk-ready,
enabling them to confidently pursue ambitious goals.
Availability:
The report is available for download:
QR Code:
#ICICILombard #IRM #RiskCulture #SandeepGoradia
About ICICI Lombard
ICICI Lombard is the leading private general
insurance company in the country. The Company offers a comprehensive and
well-diversified range of products through multiple distribution channels,
including motor, health, crop, fire, personal accident, marine, engineering,
and liability insurance. With a legacy of over 2 decades, ICICI Lombard is
committed to customer centricity with its brand philosophy of ‘Nibhaye Vaade’.
The company has issued over 36.2 million policies, honoured over 2.9 million
claims and has a Gross Written Premium (GWP) of ₹255.94 billion for the year
ended March 31, 2024. ICICI Lombard has 312 branches and 13,670
employees, as on March 31, 2024.
ICICI Lombard has been a
pioneer in the industry and is the first large scale insurance company in India
to migrate its entire core systems to cloud. With a strong focus on
being, digital led and agile, it has launched a plethora of tech-driven
innovations, including the industry first Face Scan on its signature insurance
and wellness App - IL TakeCare, with over 10 million downloads. The company has
won several laurels including ET Corporate Excellence Awards, Golden Peacock
Awards, FICCI Insurance Awards, Assocham, Stevie Asia Pacific, National CSR
awards etc. for its various initiatives. For more details log on to www.icicilombard.com
About (Institute of Risk Management (IRM) India
Affiliate
Established in 1986 and headquartered in the UK,
the Institute of Risk Management (IRM) is the world's leading certifying body
for Enterprise Risk Management (ERM) examinations and qualifications with
Fellowship at Stage 5 / Level 6. With a presence spanning 143 countries and
almost 40 years of driving excellence, IRM has published several frameworks,
thought leaderships and white papers on a range of risk themes including stress
testing, horizon scanning, climate change, artificial intelligence, pandemics, risk
culture and more. The IRM's India Affiliate is expanding the global ERM
ecosystem in India, bringing both top-tier education to develop risk
intelligent individuals and organizations for a resilient India.
IRM India Affiliate has partnered with leading
organizations such as Invest India, NIMSME (Ministry of MSME), IHCL, UltraTech
Cement, Cipla, Reliance Jio, Tata Consumer Products, HDFC Asset Management and
ICICI Lombard. It also has academic ties with institutions like Mahindra
University, Sri Sri University, NMIMS CIS, IFMR Business School, MAHE, National
Insurance Academy, and FLAME University. Other landmark initiatives include a
report with AICTE, annual CRO summit with NISM (SEBI’s capacity building
initiative), virtual risk programme for school students with Mindler, What’s
the RiskTM show on CNBCTV18 and the Enterprise Risk & India Regulation
Online Course (ERIRC) with NISM. More information on IRM’s qualifications, exam
updates, and other details are available at - https://www.theirmindia.org/