New Delhi: With the global financial crisis
underlining the importance of risk management for healthy
businesses, a study says that credit risk is one of the
biggest concerns for most companies in the developed markets
especially in the technology sector.
The Risk Management Study, conducted in Europe by
insurance broking firm Marsh India, is important for Indian IT
and IT-enabled companies as nearly 80 per cent of their
businesses come from these markets along with the US.
The study states that risk management has become an
important aspect since the past one year, primarily among the
communication, media and technology (CMT)companies.
"We think it is important to unveil the study in the
country and mainly to the IT & ITeS companies as nearly 80 per
cent of their businesses come from the US and European
markets. It is critical that our technology firms understand
the risks they face in such markets and the changing attitude
towards managing risks," Marsh India Country Head and CEO
Sanjay Kedia said releasing the report here today.
The study states that over the next 18 months, credit risk
will be one of the biggest causes of concern followed by
business continuity risk and contractual performance risk,
with 66 per cent of the respondents stating credit risk as the
primary cause for worry.
Credit risk refers to the potential that a bank borrower
or counter-party would fail to meet its obligations in
accordance with agreed terms.
Moreover, 85 per cent of the respondents feel that risk
has moved from being a mere Chief Financial Officer's entry to
a boardroom discussion.
On the risk management budget for the next year, nearly
36 per cent of the respondents expect it to go up, while 55
per cent say it would remain stagnant and six per cent expect
it to come down, the survey said.
"We have surveyed over 100 risk management decision
makers among the CMT sector and the result is one of the most
comprehensive risk management studies ever conducted in this
field. The broad consensus emerging from talking to
domestic technology companies is that these issues are equally
pertinent in the domestic context as well," Kedia added.
The report also highlights hidden risks such as errors
and omissions (E&O) and directors' and officers' liability
(D&O) that are critical to the technology sector.
Bureau Report
First Published: Friday, November 13, 2009, 21:30