The second edition of the India Risk Report is a continued collaboration between IRM India and ICICI Lombard, offering an in-depth exploration of the Risk Culture within organizations. This report aims to improve risk understanding, increase risk preparedness, and foster a robust risk culture, all with the goal of strengthening Indian enterprises' resilience. It positions them to capitalise on the unparalleled opportunities that lie ahead.
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 organisational 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.
Over the past year, the global business and Risk landscape has grown increasingly complex. 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. Cultivating a strong Risk Culture across organisations is crucial for proactive Risk Management and leveraging opportunities effectively.
A strong Risk Culture will enable an organisation to confidently pursue its objectives by taking calculated risks and effectively managing potential threats and hazards. The Institute of Risk Management (IRM) defines a simple A-B-C approach for understanding Risk Culture. 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. The risk culture inside an organisation has a big impact on how employees behave, make decisions, and ultimately how the business performs.
Developing a strong risk culture necessitates encouraging employees to proactively identify and mitigate risks while minimizing their consequences. Organisations may effectively manage complexity, adjust to changes, and accomplish strategic goals by placing a high priority on risk culture. Building trust, boosting reputation, and guaranteeing long-term sustainability all depend on having a strong risk culture, which eventually improves decision-making and contributes to organisational success.
This report is our endeavour to address risks such as cybersecurity threats, regulatory changes, operational risks, and catastrophic events, which are not mere possibilities but potential threats to sustainability; however, risk discussions often take a backseat, overshadowed by celebrations of business and revenue growth. The rapid pace of technological advancements is driving business digitization and disrupting traditional communication models, necessitating innovation and transformation. Additionally, emerging High-Velocity Risks, such as global IT outages and geopolitical conflicts, emphasise the need for advanced Risk Management capabilities.
We believe that “Promoting a robust risk culture at the organisational level is no longer a luxury, but a necessity.” As a key catalyst, we bring you an integrated analysis of:
This report analyses the self-assessment of processes and cultural standing of Indian enterprises, as well as their readiness to address current Risks. The self-assessment is derived from an extensive Risk survey that captures Risk Perceptions, Risk Management Practices and Risk Culture Aspects.
Our analysis reveals that many mid-sized enterprises recognise the importance of integrating risk management into their strategic planning processes. However, the disparity between perception and practice indicates that a significant number still lack the necessary frameworks and resources to effectively identify and respond to risks. Only a minority have established comprehensive risk management protocols, which can lead to missed opportunities and increased exposure to threats.
Furthermore, the management capabilities of these enterprises vary widely. While some have begun to invest in training and technology to enhance their risk management practices, others remain reactive rather than proactive, often addressing risks only after they arise. This highlights a critical gap in capability that could hinder growth and sustainability. The culture of risk within these organisations also plays a pivotal role.
A strong risk culture encourages open communication about potential threats and promotes a proactive stance towards risk management. As per the survey finding, only 12% of mid-sized enterprises report a strong risk culture. There is a pressing need for leadership to prioritise risk awareness and foster an environment where employees feel empowered to engage in risk discussions.
In conclusion, while there is a growing recognition of the importance of risk management among mid-sized enterprises in India, there remains considerable room for improvement. By investing in better risk management practices, enhancing management capabilities, and cultivating a strong risk culture, these enterprises can not only protect their assets but also position themselves to seize new opportunities in an increasingly competitive landscape. Addressing these issues will be critical for their continued contribution to the Indian economy and overall resilience.
