The Indian economy has overtaken developed markets when it comes to capitalising on the benefits of risk management, according to a new study from BT Global Services.
90 percent of Indian enterprises see risk management as a means of increasing competitive advantage in comparison to just 44 percent of those in developed economies, and 85 percent also think that risk encourages innovation and creativity compared to 43 percent in developed economies. India is also significantly more likely to be investing heavily in risk management strategies and systems than either US or Europe (54 percent of developing economies to 36 percent of developed).

India has acted on this by being more likely to have a board-level Corporate Security Officer (CSO) or Corporate Risk Officer (CRO), more likely to view this as a valued investment and twice as likely to have a risk management strategy for global risks. The results suggest that developing countries, contrary to accepted wisdom, are increasingly looking to become the prime movers in establishing international collaboration initiatives.

BT commissioned Datamonitor to undertake the study of 2,000 senior executives in the US, UK, France, Germany, Spain, Sweden, Brazil, China, India and South Africa. The vast majority of businesses in India (96 percent) see international collaboration, either intra- or inter-company, as being vital to the success of their business in the future. However, a large proportion of executives in India (85 percent) also believe that organisations from developed markets remain suspicious of the assurances they offer about their risk management policies, particularly when it comes to ICT, which clearly bodes ill for successful collaboration.

Sudhir Narang, MD, BT India, said, “Developed markets have been wary of risks associated with aggressive economic growth. Our evidence suggests that developing countries, fully committed to international collaboration, now boast risk management strategies that surpass even ‘western’ standards and can be trusted to support innovation and creativity”.

The impact of major global events and issues is taken into consideration by the risk management strategies of 85 percent of businesses in India, compared to just 35 percent in the US and Europe. The onset of a global economic slowdown sparked by a US recession is rated the highest global risk for the next twelve months by India, followed by the rise in oil and commodity prices, and the continued depreciation of the US dollar against other major world currencies. Businesses in mature markets are less nervous of future risks overall, although 36 percent still believe they will be impacted or highly impacted by a global economic downturn.

Narang said, “Businesses in developed markets appear quite bullish about the potential impact of global risks such as epidemics, terrorism or water security, but, ironically, they may be less prepared for major global events than their counterparts in emerging markets. It is vital that international organisations ensure their risk management plans cover all eventualities – no matter how unlikely the risk seems. And this should be seen, as it largely is in emerging markets, as an opportunity to stimulate growth and liberate innovation, rather than a chore or an unnecessary expense”.