INDIA RISK SURVEY 2019
Indian policies continue to make foreign investments in India more attractive to make economic growth robust. Policy drive in the Centre is to make India a USD5 trillion economy by 2024. The policy also aims to continue making ease of doing business more attractive with competitive and fair business practices by further digitizing the economy, and improving infrastructure, logistics and networks to promote manufacturing activities. While the Government of India and other agencies are in attempt to make operations smooth and glitches-free, the key challenges for these agencies would be to manage existing risks, identify emerging threats, and design a framework to have an action plan in place when continuity becomes a casualty. This study aims to allow businesses to develop a 360-degree risk management strategy to assist companies in preparing against any contingency, that will help companies mitigate disruption and hedge against any concerns pre-emptively. This survey uses Pinkerton Risk Wheel framework to understand and assess each risk individually and also to look at them for a holistic analyses. There are four risk categories in the Pinkerton Risk Wheel – based on the nature of threats. Some of these risks listed under each category are interconnected to each quadrant. The four quadrants in the risk wheel are – Hazard & Event Risk (natural hazards, crime, terrorism & insurgency, and fire), Operational and Physical Risk (strikes, closures & unrest, threats to women safety and accidents), Market and Economic Risk (corruption, bribery & corporate fraud, and political and governance instability), and Technology and Information Risk (business espionage, information and cyber insecurity, and intellectual property theft). INDIA RISKS India Risk Survey 2019 identifies the most significant threat types within each risk for mitigation and holistic management. The threats highlighted in this study are interconnected and overlap across domains, sectors and geographies. Corruption, Bribery & Corporate Fraud Corruption, Bribery & Fraud climbs up in the risk chart to the top position in the India Risk Survey 2019. It includes bribery/ kickback, conflict of interest, shell companies, business identity theft, and others. Among these, bribery/ kickback has emerged as the biggest threat. A series of high-profile fraud cases have been reported affecting the banking sector in the past two years. While the Government has initiated a series of crackdowns on corrupt officials and shell companies and made regulatory changes, India has not significantly improved its position in the Transparency International Corruption Perceptions Index in the past three years. Natural Hazards Natural Hazards remains at the second most significant risk to business operations for two successive years. In 2019, floods continued to disrupt business operations and hence remained a potent threat under this risk category. Persistent improvement in early warning systems and preparation to deal with natural hazards would be required. During natural calamities, business operations also get affected due to inadequate infrastructure and maintenance by concerned bodies. “Businesses operate in a complex environment wherein the nature of risks is ever changing. India’s business environment is also transitioning through regulatory changes, adoption of new business practices, and evolution of technologies at a rapid pace. All these changes are aimed at making India an attractive business ecosystem and investment destination. This also calls for quick action and collaboration between both public as well as private sector to help protect businesses against the identified risks. India Risk Survey attempts to assess business threats and aims to serve as a useful guide for policy makers and business leaders to mitigate these identified risks. Pinkerton adopts a comprehensive risk management approach, relying on data and new tools like Artificial Intelligence and so, to anticipate risks and gauge their impacts before recommending mitigation measures. The purpose of the report is to engage with all stakeholders including policy makers and business leaders to connect and collaborate in anticipating risks and mitigating them in a timely manner” -Rohit Karnatak Managing Director – India APAC & EMEA – Global Screening, Pinkerton Crime Crime risk category moves up in rankings to the third most eminent risk. Offences against public tranquility have emerged as the topmost threat to the private and public sectors under this risk category. White collar crime also poses a direct threat to companies’ finances and brand reputation. Political & Governance Instability Political & Governance Instability ranks fourth in the India Risk Survey 2019. The survey finds that policy changes are perceived as a threat under this risk category. Following the general elections in 2019, the Government at the centre with a strong mandate, is expected to continue with market reforms, and changes in regulations is on the cards. Businesses can expect reforms and change in rules in the near to medium term, which could impact the business ecosystem and particular sectors of the economy. “During 2019, India’s macroeconomic risks moved into sharper focus. Financial market volatility increased and the headwinds facing Indian economy intensified. Though the growth of Indian economy moderated in 2018-19 with a growth of 6.8 % – slightly lower than 7.2 % in 2017-18, yet India continued to be one of the fastest growing economies in the world. To achieve the objective of becoming a USD 5 trillion economy by 2024-25, as laid down by the Prime Minister, India needs to sustain a real GDP growth rate of 8%. At the same time, Indian businesses are facing a growing number of complex and interconnected challenges – from slowing growth and persistent economic inequality to non-financial risks such as climate change, geopolitical tensions and the accelerating pace of the fourth industrial revolution. This report aims to measure and quantify the different risks that businesses face when conducting operations in India. It is not just producing a risk ranking, but more interestingly, analyzing the changing perception of industry with shift in macro and micro economic factors and government policies” – Rahul Chaudhry Chair- FICCI Committee on Homeland Security Terrorism and Insurgency Risks emanating from Terrorism and Insurgency show a significant drop to the fifth position in the Indian Risk Survey 2019. This highlights a reduction in terror and Left…