Regulatory changes, especially in the US, UK & EU are driving many Indian companies to relook at how they do business and manage risks.
Marsh India, leading risk advisors and insurance brokers, has observed that compared to other sectors/industry verticals, risk management in Indian technology companies has gained significant importance and has emerged as one of the highest priorities for the C-suite. Regulatory changes in the western world, especially related to privacy and data security, have made it mandatory for most Indian Tech companies to have a robust and formally documented risk management plan. In fact, for many companies this risk management plan goes beyond management of operational risks and focuses on business continuity and issues like succession planning as well. Many technology companies have also created a new department or a position for risk management reporting directly into the board of directors.
According to Mr. Sanjay Kedia Country Head and CEO, Marsh India said, “There are over one thousand technology companies in India and most of them of them have set up formalized risk management departments. This clearly shows that risk management is important for the C-suite and cannot be ignored. The risk landscape is broadening and changing at a very fast pace and geographic boundaries are blurring. Many Indian technology companies are operating in environments with increasing levels of international regulation and litigation and it is critical to understand these risks as well as the changing attitude towards managing these risks. "
Marsh India has monitored emerging trends and broad themes related to risk and insurance among Indian technology companies over the last one year, following are the findings:
- Risk management has moved up the agenda at the most senior level; risk management functions are being utilized as differentiations while pitching for customer contracts, many companies now have a formal position of Chief Risk Officer reporting to the board
- Risk is being more formally & objectively addressed at board meetings and in other forums
- A majority of companies have reviewed their approach to risk because of the downturn and are keen to replicate global best practices, and in some cases pioneer them in India
- Customers, suppliers and credit/political risk have moved from being one of the lowest to the top risks being monitored by many Indian technology companies
- Strategic and operational risks like business continuity, currency fluctuations, employee attrition and regulatory changes are being perceived as almost as important as financial and macroeconomic risks
- Post Satyam incident, there is an increased emphasis on corporate governance, disclosures and transparency beyond what is mandated by the different regulations or listing requirements
- Regulatory changes, especially in the US, UK & EU are driving many companies to relook at how they do business. Some of these like the US healthcare HITECH Act could be a blessing in disguise which some outsourcing companies are gearing towards capitalizing upon
- New technologies or developments in older ones like the CLOUD, social networking, open source etc. spell opportunity but are also throwing up challenges related to risk for technology firms in India
Marsh India observed that events like the Satyam along with a spate of high profile bankruptcies and near failures have forced the regulators around the world to become more active, stringent and increasingly cooperative with each other to bring about corrective and disciplinary measures. While earlier there was greater focus on issues like client management from a delivery perspective, these new set of issues and changing risk landscape has compelled technology companies to seek appropriate solutions.
Marsh India is the risk advisor to several mid and large sized technology companies in India and counts all of the top 5 IT companies and 4 of the top 5 ITES companies in India as its clients. With this deep understanding of various risks that the sector faces, the Marsh conference hosted multiple sessions and panel discussions led by experts.
About Marsh India
Marsh has over 24,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with over 50,000 employees’ worldwide and annual revenue of $10 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. Its stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC’s website address is www.mmc.com. Marsh’s Web site is www.marsh.com.
