India Inc's ship needs more armaments, least prepared in APAC to tackle financial and geopolitical risks: Kroll Study

Mumbai: India Inc demonstrated the lowest levels of preparedness across the Asia Pacific region to deal with various business challenges, including financial health and geopolitical risk, in a study by financial and risk advisory firm Kroll (formerly Duff & Phelps).

Less than a fourth (about 24%) of C-suite leaders in India feel prepared to address budget challenges, including debt service and financial risks, they may face in the coming year - the lowest among all the countries covered in the study. In comparison, 30% of global market leaders and 32% of Asia Pacific regional leaders express such preparedness.

Indian CEOs also displayed lowest confidence in tackling geopolitical challenges such as tariffs, technology controls, cybercrime and supply chain disruptions, said the study shared exclusively with ET.

"Global executives, especially in the West, are far more confident about tackling cybersecurity and AI-related challenges as compared to India," said Tarun Bhatia, managing director and co-head APAC, investigations diligence and compliance, Kroll. "While a lot of investments have been made into technology and IT security in India, there are still gaps from an overall risk perspective with limited focus on data leakage, data privacy and educating the workforce."

According to Bhatia, one of the key reasons for this is that Indian executives are more focused on financial metrics than risks, "with one eye always on the quarterly performance."

"Even amongst boards, the majority of time is spent on business and financial data with cursory discussions on emerging risks and disruptors," he added.

Kroll surveyed 1,200 C-suite executives in financial services, FMCG, technology and other industries across more than 20 countries.

Only 28% of India respondents feel very prepared to face cybersecurity challenges - second to Hong Kong in their lack of confidence, along with Australia.

Within APAC, India and Australia showed the highest level of restructuring consideration over the next year at 24%, compared to 18% at the APAC and global levels.

Nearly half of Indian participants said their financial health situation has either not changed or worsened versus one year ago.

Geopolitical tensions and economic instability are among the top five challenges highlighted by business leaders globally and in APAC.

APAC leaders find proposed US tariffs more worrisome than peers across other regions, with 45% selecting it as a leading geopolitical concern versus 37% globally.

India is marginally less affected as compared to China and some Southeast Asian economies, the report said.

"The weaponising of tariffs has many companies concerned about the impact on their businesses, including around valuation, supply chain, locational strategies, cost optimisation, compliance, and investment or divestment considerations," Bhatia said. "Gems and jewellery is among the hardest hit with exports facing 26% tariff as against 3%. Textiles and ready-made garments is one of the largest export segments for India and will be negatively affected," he added.

Indian business leaders are, however, confident about growth in the domestic market.

Tata Group chairman N Chandrasekaran, in a recent address to shareholders of Tata Consumer Products, said India remains one of the bright spots of economic growth amid a volatile global economic environment. "India's long-term growth is underpinned by strong demographic and economic fundamentals and the ongoing structural reforms. India's near-term macro-outlook remains strong with stable growth expectation in 2025, falling inflation, and ongoing monetary easing."