India Results
Aon’s Global Risk Management Survey is designed to assess business leaders’ attitudes towards risk and risk management in general. Running for the ninth time in 2023, the results from respondents in India show the increasingly interconnected nature of risk, with traditional business risks and people risks converging to create significant challenges for organisations.
It is challenging to be a successful business leader in today’s world. The way decisions are made is changing, against a backdrop of an increasingly volatile global economy and ever-shifting corporate priorities. Responsibilities are growing but come down to two fundamental questions: How do we protect our organisation from risk and volatility and how can we continue to grow our business? Now more than ever, clarity and confidence are required to make better decisions.
Top 10 Risks Facing Indian Organisations Now
When Aon conducted the Global Risk Management Survey in 2021, the world was still reeling from the pandemic. The 2023 survey results show us that India’s business landscape has evolved significantly since then; concerns around economic slowdown and cash flow have been replaced by risks associated with fast growth rates (the country is forecast to move from the fifth to the third largest economy by 2030) and increasing global connectivity.
- Cyber Attacks/Data Breach
- Business Interruption
- Failure to Attract or Retain Top Talent
- Failure to Innovate/Meet Customer Needs
- Property Damage
- Product Liability/Recall
- Rapidly Changing Market Trends
- Supply Chain or Distribution Failure
- Personal Liability (Directors & Officers)
- Increasing Competition
Based on this research and from listening closely to our clients, we see four key themes that are driving concern and influencing these risk rankings in India:
1. Caught in the cyber crosshairs
India ranks fourth amongst the top five countries by the number of total cybercrime victims1, witnessing 1.39 million cybersecurity incidents in 20222. Since September 2022, India reported an average of 1,787 cyberattacks per week against a global average of 983 attacks per week.3
Cyber attacks/data breach risk has consistently been ranked a top risk for the last three years globally and remains the number one risk in the future, reflecting technology’s role as both a key enabler of economic growth and driver of the progressively complex, evolving cyber threat landscape. The widespread use of digital infrastructure such as Unified Payments Interface (UPI), Aadhaar, and Open Network for Digital Commerce (ONDC) is likely to increase India’s dependency on technology and exposure to cyber risk.
A range of regulatory requirements, such as the Personal Data Protection Act which aims to regulate how entities process users’ personal data and also requires listed companies to proactively address cyber-attacks and data breaches has been introduced by the government. We have also seen an increased number of clients starting to utilise risk transfer mechanisms such as insurance, however this is only one small element of the comprehensive approach required.
2. Business interruption: perception of risk may be greater than reality
While business interruption risk sits in the number two spot both globally and in India, only 16.7 percent of companies in India have reported suffering a loss compared with 32.2 percent globally. We believe there are potentially two aspects at play here. First is the possibility that the statistical inconsistency demonstrates the robust approach Indian organisations take to minimise the impact of any business interruptions.
We also suspect that perception may be outpacing reality when it comes to business interruption. Organisations across the globe have seen the severity of supply chain disruption that can arise from geopolitical events, including the Russia Ukraine war and USA China relations. Many sectors in India, such as chemical and pharmaceutical, have experienced a shortage of raw materials in recent years. It may be a heightened awareness of these issues that has pushed this risk higher up the rankings. It is worth noting that recent supply chain disruptions have also created opportunities for India as countries have moved to diversify their supply chains beyond China.
3. Talent is now firmly on boardroom agendas
Globally the risk of failure to attract or retain top talent sits at number four. Its higher position in India reflects the challenge organisations are facing to attract candidates with the right skills and in the right numbers. In the 2021 survey this risk only just made the top 10 (it came in at number nine). The increased focus on talent comes at a time when twice as many Indian companies have reported suffering a loss due to lack of talent compared to those reporting losses incurred as a result of a cyber-attack.
Despite a population of 1.4 billion, finding people with the right capabilities, especially as businesses continue their digital transformations, is an ever-growing risk at all staffing levels for Indian organisations. Compounding the talent challenge is the country’s unsustainable wage growth expectation of more than 10 percent per annum, and one of the highest attrition rates in the world.
Many companies are looking at building talent from within by focusing on skill development programs. Starting in 2024, organisations will also embark on the implementation of new labour codes. These codes may cause short-term pain, but we believe in the long run they will simplify businesses operations and create opportunities by simplifying laws and helping to frame laws and policies for unorganised talent pools and sectors.
4. Disruptive culture puts focus on innovation
The risk associated with failure to innovate and meet customer needs is ranked fourth in current risks and second in future risks. Two years ago, this risk did not make the top 10, and the current ranking is much higher compared to global trends. The focus on these risks may arise from the success of Indian organisations as ‘disruptors’. India has the third highest number of unicorns behind USA and China, and the third largest ecosystem for recognised start-ups.
Driving this growth are the changing demographics of Indian society: people are climbing the class ladder, and companies are in a constant race to work out how to attract their customers’ future spend while fending off global competitors attracted by such a large, potential market. The prospect of this global competition entering the Indian market may also explain why the risk of rapidly changing market trends sits at number seven for India but does not feature globally.
What was missing?
We note that the risk of change in legislation/regulatory changes has not ranked either in current or future risks, an omission that was surprising given the amount of movement related to issues such as data privacy and cyber security. It could be that such concerns are wrapped up in other risks such as cyber.
