Risk management should be seen as an opportunity and innovative approaches are required to address mission critical risks that are key to organizational growth in a turbulent economy. In the past decade, ever changing situation of legal and regulatory mechanism in India posed a major risk to the business environment in addition to the market volatility risk. This has triggered the need for a robust risk management framework to be deployed and monitored on a continuous basis to enable the executive management in the decision making process. A risk management committee led by independent directors is required to institutionalize sound corporate governance. These are some key insights shared by the participants at the Conference on Risk Management “Competing for Growth: Turning Risks and Opportunities into Results” organized by CII in Bangalore on Friday with Ernst & Young as the knowledge partner.
Ms. Kiran Mazumdar-Shaw, Chairman and MD, Biocon, said, “We need to have a robust risk committee led by independent directors in addition to the audit committee for better governance. The drug discovery process is a significant risk that pharmaceutical companies face and by far is larger when compared to risks in any other business. Given that there is a clear shift towards generics, profitability and sustainability of the pharmaceutical companies engaged in the drug discovery process is under immense stress.”
Ms. Kiran Mazumdar-Shaw added, “Regulation has made the drug discovery process unaffordable to many companies. It takes 12 years for a drug to reach patients after its discovery. One to two billion dollars are typically required to invent a drug. A mobile phone or an aviation part can be corrected for defects in later versions, whereas it is not possible to reuse the process of failed invention in the case of drugs. The drug innovation process has the lowest ROCE/ ROI in the industry. Except Novartis many global majors have poor returns on their drug discovery spends”
Mr. Neville Dumasia, India Risk Leader, Ernst & Young, says, “Companies with more mature risk management practices outperform their peers financially. He mentioned that a recent Ernst & Young survey revealed that 82% of institutional investors are willing to pay a premium for effective risk management and those Companies in the top 20% of risk management maturity delivered three times the level of EBITDA than the bottom 20%”
Mr Neville Dumasia also mentioned that “Risk management will emerge as the fourth dimension of business. People, process and technology being the other three dimensions. He believes that risk management as the fourth dimension of business has the potential to fundamentally transform how organizations connect risks to rewards”
Mr L Krishnan, CII Chairman, Karnataka, and MD, Taegutec India Pvt Ltd, said, “CII has established a mechanism for total cost management. Measurement and benchmarking always lead to better risk management. Total cost management and risk management has gained more importance in the recent times due to higher volatility of the markets.”
Mr Nitin Bhatt, Conference Chairman, Partner Ernst & Young, said, “High performance companies view risk and opportunity as two sides of the same coin. According to Ernst & Young’s Global Risk Radar for 2012 and 2013, macroeconomic risks, pricing pressures, market risk volatility, emerging technologies such as cloud and social media, and regulatory and compliance related risks are some of the major risks global companies are facing today. Many of the world’s great companies were built in times of economic stress. Opportunities for growth exist today as well, and companies that succeed will be the ones who demonstrate an unrelenting commitment to execution intensity and razor sharp risk management.”
Chairing the panel discussion on “Managing the risks and opportunities in the Boardroom” Mr. Rajiv Memani, Country Managing Partner, Ernst & Young, said, “One thing that has changed very significantly over the past decade has been the transformation in business models and the ability to manage disruptive change. Companies that have been able to manage the risks associated with these changes have set themselves apart from a growth and profitability perspective.”
Mr. GBS Raju, Chairman-Energy, GMR Group, said, “Patience, persuasion and passion are needed to cope up with regulatory challenges. This is our mantra to address the risks. For us, 59 approvals and over 400 permissions were needed to build a world class airport in a record time of 36 months.”
Mr. Bhaskar Bhat, MD, Titan Industries, said “Globalization, satellite TV, better communications significantly increased aspirations of the people. As a result, demand for lifestyle products will grow up. Our view is to give it first to the employees and motivate them to contribute better to the company. Consumer analytics will help one understand different market performances”
Mr. Sachin Bansal, Co-founder & CEO, Flipkart, said “We saw some benefits due to recession since goods were available at lower costs. We need to challenge the way our partners think and find new way of doing normal things to achieve accelerated growth”
Mr. Amit Sharma, COO, IBM India, said, “Major risk of operating in emerging markets is that they are inherently volatile. Having strong portfolios is one way of addressing the volatility. What worked earlier may not work always.”
Mr. Ram Sarvepalli, Partner, Ernst & Young India said “in a period of significant uncertainty some companies distinguish themselves by choosing a path that allows them to innovate and improve and yet be disruptive”
Sourced From: Genesis Burson-Maresteller
Ms. Kiran Mazumdar-Shaw, Chairman and MD, Biocon, said, “We need to have a robust risk committee led by independent directors in addition to the audit committee for better governance. The drug discovery process is a significant risk that pharmaceutical companies face and by far is larger when compared to risks in any other business. Given that there is a clear shift towards generics, profitability and sustainability of the pharmaceutical companies engaged in the drug discovery process is under immense stress.”
Ms. Kiran Mazumdar-Shaw added, “Regulation has made the drug discovery process unaffordable to many companies. It takes 12 years for a drug to reach patients after its discovery. One to two billion dollars are typically required to invent a drug. A mobile phone or an aviation part can be corrected for defects in later versions, whereas it is not possible to reuse the process of failed invention in the case of drugs. The drug innovation process has the lowest ROCE/ ROI in the industry. Except Novartis many global majors have poor returns on their drug discovery spends”
Mr. Neville Dumasia, India Risk Leader, Ernst & Young, says, “Companies with more mature risk management practices outperform their peers financially. He mentioned that a recent Ernst & Young survey revealed that 82% of institutional investors are willing to pay a premium for effective risk management and those Companies in the top 20% of risk management maturity delivered three times the level of EBITDA than the bottom 20%”
Mr Neville Dumasia also mentioned that “Risk management will emerge as the fourth dimension of business. People, process and technology being the other three dimensions. He believes that risk management as the fourth dimension of business has the potential to fundamentally transform how organizations connect risks to rewards”
Mr L Krishnan, CII Chairman, Karnataka, and MD, Taegutec India Pvt Ltd, said, “CII has established a mechanism for total cost management. Measurement and benchmarking always lead to better risk management. Total cost management and risk management has gained more importance in the recent times due to higher volatility of the markets.”
Mr Nitin Bhatt, Conference Chairman, Partner Ernst & Young, said, “High performance companies view risk and opportunity as two sides of the same coin. According to Ernst & Young’s Global Risk Radar for 2012 and 2013, macroeconomic risks, pricing pressures, market risk volatility, emerging technologies such as cloud and social media, and regulatory and compliance related risks are some of the major risks global companies are facing today. Many of the world’s great companies were built in times of economic stress. Opportunities for growth exist today as well, and companies that succeed will be the ones who demonstrate an unrelenting commitment to execution intensity and razor sharp risk management.”
Chairing the panel discussion on “Managing the risks and opportunities in the Boardroom” Mr. Rajiv Memani, Country Managing Partner, Ernst & Young, said, “One thing that has changed very significantly over the past decade has been the transformation in business models and the ability to manage disruptive change. Companies that have been able to manage the risks associated with these changes have set themselves apart from a growth and profitability perspective.”
Mr. GBS Raju, Chairman-Energy, GMR Group, said, “Patience, persuasion and passion are needed to cope up with regulatory challenges. This is our mantra to address the risks. For us, 59 approvals and over 400 permissions were needed to build a world class airport in a record time of 36 months.”
Mr. Bhaskar Bhat, MD, Titan Industries, said “Globalization, satellite TV, better communications significantly increased aspirations of the people. As a result, demand for lifestyle products will grow up. Our view is to give it first to the employees and motivate them to contribute better to the company. Consumer analytics will help one understand different market performances”
Mr. Sachin Bansal, Co-founder & CEO, Flipkart, said “We saw some benefits due to recession since goods were available at lower costs. We need to challenge the way our partners think and find new way of doing normal things to achieve accelerated growth”
Mr. Amit Sharma, COO, IBM India, said, “Major risk of operating in emerging markets is that they are inherently volatile. Having strong portfolios is one way of addressing the volatility. What worked earlier may not work always.”
Mr. Ram Sarvepalli, Partner, Ernst & Young India said “in a period of significant uncertainty some companies distinguish themselves by choosing a path that allows them to innovate and improve and yet be disruptive”
Sourced From: Genesis Burson-Maresteller
