Service sector

Framing risk intelligence in the service sector

Risks have been completely redefined by the pandemic – risk managers have worked overtime to create dynamic strategies and insulate organizations from troubling scenarios. Flexibility and agility have become mandatory standards in order to operate seamlessly in the COVID-19 stricken global order.

To assess the risks besetting the service industry and re-evaluate enterprise risk management (ERM), ICICI Lombard & CNBC-TV18 hosted a specially curated “Risk Masterclass 2021”. This is a special initiative under the umbrella of the India Risk Management Awards which recognizes leading Indian organizations that have taken the lead in business risk management.

The session began with an address by Sahil Kangotra, Vice President, Corporate Solutions Group, ICICI Lombard. Sahil looked at the disruptive risks that were widely exposed in the services industry, ranging from cyber risks, global regulations, artificial intelligence, blockchain to currency exchange risks. He said: “COVID-19 will represent a shift from frequent risk identification to effective risk management.” He added that risk ownership must be holistic, taking a 360 degree view is imperative to identify early signals and act in time. To end his note on how ICICI Lombard actively helps clients manage complex risk management and mitigation efforts, he passed the baton to the show’s keynote speaker, Santosh Kumar Nair, Partner, Deloitte India.

Starting on a lighter note, Santosh remarked that this watershed event has reset our settings to default and nothing remains as before. He shared information from a recent survey conducted by Deloitte which covered around 200 global companies and 2000 CXOs, 6 out of 10 respondents indicated that the pandemic is not an outlier, meaning that 60% of respondents believe that such events will continue to happen in the future and probably at a much higher frequency. He said, “The hallmark of a good resilient framework is that businesses will be able to reduce response time and will be able to respond to these emerging threats in a much more agile and proactive way, if you don’t grasp the opportunity, your competitors certainly will and the flip side of the risk is actually an opportunity. He then spoke about capital adequacy, extended enterprise resilience, brand risk resilience, and the interconnectedness of risks that have a cascading impact on organizations.

The keynote address was attended by a panel of distinguished industry representatives – Sanjay Datta, Head, Underwriting, Reinsurance and Claims, Actuarial, ICICI Lombard; Kamal Kakkar, Chief Financial Officer, Thales India; Saurabh Lal, AGS Transaction; Manoj Rane, Partner and Head of India, Sonic India; and Bhaskar Anand Rao, Bengaluru International Airport – in conversation with Paromita Chatterjee, Special Correspondent, CNBC-TV18. Datta explained that it is the business of companies to take risks and they will continue to take risks and face disasters of various kinds. On the other hand, Lal highlighted the importance of business continuity planning.

Aviation, despite being the most risk-aware sector, has been the hardest hit, Rao said, explaining how the pandemic has exposed them to unexpected risks. He spoke at length about the drying up of cash reserves which posed a huge threat to this industry. Other issues included strict travel restrictions, fear, uncertainty among leaflets and a lack of clarity on vaccinations that crippled the travel and hospitality industry.

Kakkar explained how Thales India has adopted strict IT controls, reinforced the security of communications with third parties to exclude the possibility of cyber risks. He said “too much reliability on technology sometimes uh creates a lot of gaps”.

From an organizational perspective, Rane explained the need for greater involvement of C-suite heads and multiple onboard risk specialists to approach risk management strategically. In addition, he warned of non-financial risks, which are not normally taken seriously by companies and which can turn into major problems if left unaddressed.

The panel thoughtfully agreed on the importance of ERM; how it’s time to leave its tick-in-the-box status behind and be given due relevance in the face of an uncertain future. Datta stressed the importance of resilience and stressed the need to create a pandemic pool to survive such setbacks and deal with risks more effectively. Before the panel ended, Lal alluded to the vision of a contingency reserve coupled with digital infrastructure that can enable organizations to build financial resilience.

This is an article in partnership