Siddharth Vishwanath, Executive Director, Risk Advisory Services, PwC India
An entrepreneur and the resulting firm or entity is characteristically a risk taker. The dynamics of the world economy as we see today are undergoing a sea change with developing countries such as China and India featuring among the fastest growing economies and strategic emerging markets. As the epicentre of power shifts, so do the dynamics. In the context of present-day business, add the variable of the lightning speed at which information circulates and we have on our slates (or iPads) a complex and double-edged equation--an equation that promises bountiful rewards, subject to appropriate usage and strong sustainable policy frameworks.
The risks of yesterday are extant and new risks have emerged on the horizon. These arise from increasing interconnectedness of financial markets, supply chains, information pathways. The threats from disruptive technologies, societal shifts and a complex regulatory environment are also adding to the risk landscape. Interconnected financial markets, supply chains, information pathways, threats from disruptive technologies, societal shifts and complex regulatory environment translate to a cascading risk impact from the originating country to other territories across the globe. As a result, ‘black swans’ signifying high impact but rare risk events are today turning ‘grey’, that is, high impact events are less rare. Interconnectedness is also leading to cascading effects as one risk event triggers another with multiplied impact.
Our Risk Management Survey 2013 attempted to peek into the mind of the risk stalwart, the industry professional with ear to the ground. More than 80 respondents across 13 industries spanning the length and breadth of the country helped us decipher, analyse and consequently prescribe the intangible value that the risk management process holds for the present industry landscape.
The top risks identified by risk professionals do not seem to include key sources of grey swans. The focus on the ‘here and now’ has also perhaps restricted organisations to see risk management as a key lever for ‘value protection’ or ‘value enhancement’. Risk management is largely seen as a cost, driven by regulations or good practice as against a source of value. This is clearly evident from our survey which reveals that most organisations have a risk management policy in place but only 27% of the respondents have embedded the policy in their business and operations by aligning it with their objectives, operating procedures and performance measures.
To navigate in the fast evolving risk landscape, Indian organisations need to work on a two-pronged approach, focus on strengthening their current risk management programme (go beyond compliance and embrace it in substance) and also build risk resilience. While a strong risk management programme will help organisations deal with the short-term ‘known known’ risk landscape, an institutionalised process for building resilience would be key to manage the ‘known unknowns’.
13 January, 2014
at 11:57:31 AM
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