A large number of Indian businesses believe that an organisation’s risk profile has a significant influence on capital-allocation decisions, most of them don’t appoint a ‘chief risk officer’, says an EY report.
According to the consulting firm, India Inc has a long way to go in managing risks at a time when economic woes are increasing and reputation can be harmed by cyber-security failures and frauds.
It highlights that most companies do not appoint a ‘Chief Risk Officer’ and risk management activities are governed by the audit and risk committees of the board in 70 per cent of the businesses surveyed.
“It is expected that organisations in India will soon comply with the requirements of the Companies Act and appoint Risk Management Committees,” as per the EY’s Global Governance, Risk Management and Compliance (GRC) survey, titled “How India stacks up against global trends”.
“With rapid changes in the world economy, businesses need to leverage technology at a much greater level to strengthen their internal audit function as it enables the organisation to anticipate emerging risks, and stay in the game,” EY India Partner and Internal Audit Leader Manesh Patel said.
Leveraging technology will not only ensure adequate identification of potential risks but also reduce cost and efforts, Patel added.
In India, reputation-risk, competitor innovation and economic uncertainty emerged as the top three concern areas, while the top three concern areas globally were economic uncertainty, regulatory compliance and cyber security.
Moreover, there is a relative lack of emphasis on leveraging technology more effectively across risk functions as 62 per cent of the businesses surveyed do not utilise technology to enable risk management activities or are unaware of any technological solutions, the survey said.
“Indian businesses are increasingly realising that the future belongs to those who innovate their business models to deliver new and better customer value,” EY India Partner and National Leader – Risk Advisory Services Nitin Bhatt said.
Bhatt added: “Many organisations are innovating the way they produce and deliver goods and services. For instance, by adopting robotics, artificial intelligence and predictive analytics, companies are improving the speed and quality of delivery, and passing on the cost-savings to their customers”.