Trade disruptions and cash flow are top risks for Indian businesses

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Mumbai: After the economic slowdown, business interruptions and cash flow/liquidity risks are the two main risks for Indian businesses in the coming years, according to a new report on Thursday.

While 83.3% of Indian businesses expect an increase in the total cost of insurance risk, businesses are the least prepared for reputational risks, according to the report by global professional services firm Aon. “Indian companies are adapting to the need for periodic insurance assessment and proactive planning to mitigate insurable risks,” said Jonathan Pipe, CEO, India at Aon. “We have seen a significant increase in the use of captives to transfer risk as well as greater support from external experts in assessing all possible business risks,” he added.

Businesses commit additional budgets to manage and mitigate their potential risks, especially accelerated rates of change in market factors, economic downturn, and business disruptions. “With better planning and expert advice, most risks can be managed effectively,” he said. Organizations are shifting their focus from event-based risk assessments to impact-based risk assessments in the country.

For example, business interruption was once considered a linear risk, but Covid-19 and geopolitical risks have demonstrated how it can affect multiple industries and businesses simultaneously and globally, according to the report. Companies, however, are the least prepared for reputational risks, with none of the interviewees having a risk management or continuity plan in this regard. Nearly 50% of Indian businesses cited economic downturn/slow recovery as one of the top risks leading to losses, according to the report.

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