Lauding the new age risk practitioners

Effective risk management enables organisations to identify potential risks and develop strategies to mitigate them.

The 9th edition of India Risk Management Awards, started with a welcome address by Bhargav Dasgupta, Managing Director & CEO, ICICI Lombard General Insurance, who highlighted the importance of risk management in today's dynamic business environment and praised the efforts of the nominees for their outstanding work in this field.

The chief guest for the evening was Mr. K V Kamath, Chairman of the National Bank for Financing Infrastructure & Development (NaBFID). In his speech, Mr. Kamath emphasized on uncertain events like Covid-19, war in Europe, the inflationary impact of these events, technological disruption & how companies must navigate unexpected and unpredictable events, to succeed. Mr Kamath emphasized on this with an example of an auto-ancillary company who harnessed an uncertain situation like Covid-19 and gained from it by re-engineering some processes & successful implementation for increased growth.

Despite facing significant challenges, the Indian economy has remained resilient. Mr Kamath spoke how the situation in Europe has led to inflation across the Western Hemisphere & how India has emerged strong. He said, “India has managed that piece very well. I think appropriate steps by all authorities, whether it the central Government or whether it is the Reserve Bank of India, this situation has been managed as well as it could have been. And the hallmark I see here has been the confidence of keeping liquidity ample throughout the crisis, not increasing interest rates despite inflationary tendencies seen everywhere else & chart our own path in terms of a very moderate rate height increase & observing inflation all the time & indeed inflation has abated”.

He also spoke about how technology can become a risk, if we don’t comprehend it correctly. He said, “Whether ChatGPT will make things redundant. ChatGPT may not but a combination of AI, machine learning, ChatGPT. This is early stages of ChatGPT, now where will it go to and what we are talking of is the machine being able to do things which a human was doing and do certain iterations which a human probably can’t where an AI engine does.”

Mr Kamath concluded his speech by saying that that the current global turbulence is at a level he has seen for the first time in his career. He said, “In India, we have managed to insulate ourselves very well. I will use the words very well & not just well”. He also added, “There are two indicators of new India. One is, look at where data is. We are the largest consumers of data & we are the cheapest data available. And we are the most profitable in terms of getting this data out. It’s cheap & profitable, which normally do not co-exist”.

The event also featured the launch of ICICI Lombard Corporate India Risk Index 2022, a robust, one-of-its-kind, scalable risk index. Mr. Aroop Zutshi, Global Managing Partner & Executive board member, Frost & Sullivan, highlighted key insights of the index.

We also had an insightful fireside chat with Shereen Bhan, Managing Editor, CNBC-TV18 and Mr Kamath. He said India has moved from capital deficit to capital neutral to a capital-surplus country. He believes the private equity sector coming into newer types of businesses will be the next momentum providers for Indian economy.

KV Kamath, the veteran banker and chairman of the National Bank for Financing Infrastructure and Development (NaBFID), praised India's monetary policies. According to Kamath, India is taking the right steps when it comes to interest rates, and the Reserve Bank of India (RBI) has not made a single misstep in the past few years.

Mr. Kamath's praise for India's monetary policies is a clear indication of the confidence he has in the country's economy.

He said that he is proud of the Indian banking system, adding that he is sure that a First Republic Bank-like crisis won't happen in India.

"I can be proud of banking regulations and risk management practices in India. This sort of a thing can never happen in India," Kamath said.

Kamath added that the US banking crisis indicates the flaws in the risk management practices of regulators and banks. "The US banking crisis indicates vast holes in the risk management practises by both regulators and the banks themselves. When First Republic Bank crisis happened, I went into the balance sheet of that bank and what struck me was the P&L had nice profit, NPAs were in basis points, but balance sheet item number 2 which was held to maturity instruments - the value is shown as almost 100 and within brackets the current valuation was 84, so I said am I reading right? In previous year it was 97 or something like that, so what has happened? Then it struck me that this where the hole is and it is not accounted for, it is just a line item. I am sure there are lessons which have been learnt," Kamath said.

One of the primary drivers of growth in India is domestic consumption. Mr. Kamath believes that India's demographic gives the country a unique advantage in this regard. India needs a young population that can both build and consume.

His insights was well-received by the attendees, who appreciated the recommendations for effective risk management.

We concluded the event with the award distribution ceremony for large-cap, mid-cap & small-cap firms across various categories.

You can catch the highlights of the event below:

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