Business disruption, cash flow top risks for Indian firms amid economic slowdown

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Staff Reporter | 22 Sep, 2022
After economic slowdown, business interruption and cash flow/liquidity risks are the two top risks for Indian companies in the coming years, a new report said on Thursday.

While 83.3 per cent of Indian businesses expect the total cost of insurance risks to increase, companies are least prepared for reputation risks, according to the report by global professional services firm Aon.

"Indian businesses are maturing to the need for periodic insurance assessment and proactively 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 risks as well as greater support of external experts in assessing all possible business risks," he added.

Companies are committing additional budgets to manage and mitigate their potential risks, particularly accelerated rates of change in market factors, economic slowdown and business interruption.

"With better planning and expert advice, most of the risks can be managed efficiently," he said.

Organisations are shifting their focus from event-based to impact-based risk assessments in the country.

For example, the business interruption was once seen as a linear risk, but Covid-19 and geopolitical risks have demonstrated how it can affect multiple industries and companies simultaneously and globally, the report mentioned.

Businesses, however, are least prepared for Reputation Risks with none of those surveyed having risk management or continuity plans for it.

Nearly 50 per cent of Indian businesses cited economic slowdown/slow recovery as one of the top risks that incurred losses, said the report.