2020 has become the unforgettable year the way it has progressed. We did our planning as everyone one does when we enter in a new year as an individual as well as corporate. Unfortunately, none of us could stick to the plan that we made. Let me apprise you it was not only COVID that haunted us. Covid did the work of icing on the cake. It made it worst though I feel worst is yet to come.
The Global Risks Report forecasts a year of increased domestic and international divisions with the added risk of economic slowdown. 78% of survey respondents said they expect “economic confrontations” and “domestic political polarization” to rise in 2020
This year has taught us to fight with unforeseen circumstances and over come with them. Earlier, we had a option of transferring the risk to the region/corporate/individual where it can be dealt with no/minimum impact. But this time whole world was sailing in same boat.
We are witnessing massive disruption in country for ex. trade war between countries, losing jobs, political uncertainty, economy is on ventilator, riots,war situation with neighbor countries, featured in category 4 with syria that means we are living in high risk category country (which is clear indication these threat has to be handled by us without any support). That is another blow for our economy which created discomfort among investors. Therefore I said it is not only COVID which has pushed us.
Nationalism, trade wars and epidemics make for a heady cocktail. Company moving to WFH model has increased risk of data compromise, health compromise etc.
Some significant risks that has be deal with solemnly:
⦿ Comfort Risk
⦿ Geopolitical Risk
⦿ Compliance Risk
⦿ Reputation Risk
⦿ Security and Fraud Risk
Many of the above risk you must have heard of before. Let me explain in layman language.
⦿ Comfort Risk - When you're comfortable with risk, Basically it defines your appetite of taking risk.you're able to take chances when appropriate, and you're not afraid to innovate and experiment with new ideas and new ways of doing things. This risk has increased significantly during 2020 as people has lost job and and started new venture for living thinking they have nothing to loose left and you thought new venture could be very successful
⦿ Geopolitical Risk - This comes in high category in country like India where govt is in full majority yet investors aren't confident about political stability or not have confident in govt. There could multiple reason for driving the risk. As Aug drew to a close, the coronavirus left markets reeling from their worst paper losses since the crisis, with governments scrambling to formulate a cohesive response. No clarity on policy, too much changes in law in every now and then. Lack in govt.
⦿ Compliance Risk - In nutshell company has to abide by all the contract clauses to remain complaint pro-actively. This is known and old risk that every organization factors in while running the business. Brief explaination of risk, Compliance risk is the threat posed to a company’s earnings or capital as a result of violation or non conformance with laws, regulations, or prescribed practices. Companies that fail to comply with the necessary standards may be subjected to fines, payment of damages, and voided contracts. This, in turn, can lead to diminished reputation and limited business opportunities as the company finds its franchises reduced in value and its potential for expansion curtailed. In extreme cases, the company may find it is no longer capable of enforcing its contracts.
⦿ Reputation Risk - Reputation risks arise when a company fails to meet stakeholders’ expectations and
they change their behaviour. Reputation risks seen as an original, stand-alone risk category (reputational
risk) arise as a result of e.g. rumours about a potential hostile takeover or negative
media reports about changes to the board of directors. Best example for this category is "Yes Bank".⦿ Security and Fraud Risk - Fraud and Security are ever present risks to all organisations, be they public, private or
not-for-profit. Fraud and Security can have a significant negative impact on organisations
through disruption to their services or undermining the achievement of their objectives. Despite the risk, identifying adequate resource to manage the risk is a challenge for many
across the public services. It has added the risk moving organizations to WFH model. We are getting encountered a new security threat. Organization which are not tech savy has become the vulnerable. Irony, of our country is that we are still not addressing the risk instead we are shying away,
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Very well explained all the risk assosiated with 2020
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