India, Inc. embraces risk calculators
Risk management is the new fad in corporate India, which is hiring chief risk officers these days.
By Priti Patnaik, TNN |
NEW DELHI: To cope with a dynamic business environment fraught with uncertainties, companies are seriously calculating their risk exposure. Risk management is the new fad in corporate India, which is hiring chief risk officers, especially at a time when companies concerned are expanding and diversifying.
The range of risks, companies face, could be geo-political, terrorism-related or even currency risks. “Companies are waking up to various risks in their operating environment. Risk management is a priority, especially for companies that are diversifying,” Sanjay Kedia, chief of Marsh India, an insurance broking firm, said.
Ronesh Puri, MD at the headhunting firm Executive Access, said: “It is a fairly new trend. But it is gaining currency. Companies are recruiting chief risk officers at a senior level. They asses various risk elements and make recommendations on ways to reduce such factors.” The idea is that risk is taken seriously with a lot of expertise going into the understanding of risk and rewards in a particular sector.
Companies, other than banks and insurance companies, have begun experimenting largely due to multiple businesses and acquisitions overseas. “Nobody wants to play blind, the stakes are very high,” Mr Puri added. The financial services sector is a trend-setter in this regard.
Typically, a risk officer should have good financial acumen and must know the contours of financial management. “Globally, most companies have risk managers. Risk officers must have an understanding of various risk elements and bring an additional competency to the table,” he added.
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With companies seeking exponential growth, risk officers are needed to alert them on various contingencies in the line of their businesses. “While no business is risk-free, and risk management does not eliminate all risks, risk management, in a business context, is about reducing the cost of risk, which includes the cost of managing risk,” KG Krishnamoorthy, head, underwriting, Bajaj Allianz General Insurance said. The steps in risk management include risk identification, assessment, control, risk minimisation, risk transfer, retention and risk communication.
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