Holistic risk management on the rise in India: Pandit

Mrunal Pandit is global head of insurance at Tata Consumer Products, the Indian fast-moving consumer goods company that is part of the Tata Group and the world’s second-largest manufacturer and distributor of tea and a major producer of coffee. Following her participation in the debate – Building organisational resilience against the impact of climate change and natural catastrophes – at Parima’s Mumbai event in June, Adrian Ladbury interviewed her about her career, the evolution of risk and insurance management in India, the rising role of ESG, developments in the Indian insurance market and what is needed to rise to the challenge of climate change. This interview forms part of the ongoing Risk Frontiers Asia survey of leading risk managers in the Asia-Pacific region, is sponsored by HDI Global, which will be published in full at the end of the year. Adrian Ladbury (AL): How and why did you become a risk manager, what do you like about the job and what are the more challenging aspects? Mrunal Pandit (MP): The role of risk manager happened by chance. I am a numbers person and love to analyse and interpret the data to find a solution to a problem. Nearly two decades ago, I stepped into this field when I was hired by a large insurer for their office in western India, in the very city I come from. That was the starting point of my journey, which became more challenging, exciting, and a learning experience. Selling a car insurance policy to a neighbour was literally the first step. They owned a small old family car, but they were kind enough to put their faith in my work and the organisation I worked for. During the first decade, I was underwriting risks for power plants, chemical companies, bank assurance plans and the like. This period also saw me gain the coveted Fellow of Insurance Institute of India (FIII) designation, and my most fulfilling role was as an advisor to the Ministry of Health with the Government of India, where I designed a program that impacted the lives of millions of women and children. The last few years have brought a new element to my role, my knowledge, and my understanding of the risks. As a global head of insurance for an FMCG company having world-wide operations, this poses a new set of challenges. We live in an era in which climate change, cybersecurity, global conflicts, geo-political risk, stress in the supply chain and pandemics can cause major business disruptions in a matter of days. Add to that managing employee and management’s expectations, and compliance with region-specific regulations, this can be a more daunting task. AL: How has the role changed and evolved over time? What impact did Covid-19 have on the profession? How has PARIMA helped you? MP: The Covid-19 pandemic has significantly impacted risk management practices in India and worldwide. Post-pandemic, businesses have had to rapidly adapt to new operating models, highlighting the need for robust operational risk management and business continuity plans. Cyber risks have also taken centre stage, with the digital transformation/footprint accelerated by the pandemic. I would say, risk management has become more agile and robust, moving from annual assessments to continuous monitoring and improvement in risk management and crisis preparedness. As a result, companies are increasingly investing in comprehensive risk management frameworks that address these evolving challenges. Organisations now adopt a holistic management perspective across all levels to ensure success, focusing on coordinated and interactive risk management. PARIMA as an organisation has provided a platform to connect with various risk managers in the Pan-Asia region and learn from them the best practices they follow in their organisation for improvement of risks. Apart from that, the various events/ knowledge-sharing sessions organised have provided valuable insight on how to manage the risk better. This has helped me immensely as a risk manager for improving the risk landscape for my organisation. AL: Why do you think risk and insurance management is a good career option for young professionals? MP: Risk and insurance managers play a crucial role in strategic decision making, ensuring business resilience, and protecting organisations from potential threats to the business. With the increasing complexity of risks in the modern business environment, the demand for skilled risk managers is on the rise. This career path offers diverse experiences with opportunities for growth, stability, and influence along with the chance to contribute to India’s economic growth, making it an exciting and rewarding choice for ambitious young professionals. AL: What are the most important risks facing corporations in Asia currently in your view and why? MP: When discussing the most significant risks facing corporations in Asia, it is essential to tailor the perspective to each country. For India, cyber risks, crime and natural catastrophes top the list. With a vast and diverse population, managing health emergencies and natural disasters effectively is crucial to ensuring economic stability and social welfare. Additionally, as Asia continues to develop and urbanise, managing these risks will become increasingly important for sustainable growth. Businesses must prioritise risk management and mitigation strategies to navigate these challenges. AL: To what extent are you involved with ESG and in what way? What impact, if any, is ESG having on your relationship with the insurance market? MP: I am not directly involved in the ESG practice of my organisation but whatever steps the respective departments take is very well documented as a part of the tool-kit that we share with the insurers at the time of insurance renewal. Because of the sustainable measures adopted by the organisation, we have been able to leverage better pricing as well. AL: Are you getting value for money with your insurance? What is the most worrying area of insurance for you in terms of capacity available and price? MP: The Indian insurance market has come a long way, from a tariff to a de-tariff regime followed by current state of semi-tariff rating (which currently is a guidance rating of sorts). The Indian market is slowly moving towards opening up of the policy wordings, which could be beneficial to the customers like us to customise covers as per our risk exposure and explore more broad form covers that are currently available in the international markets. However, the availability of capacity and pricing remain a concern, especially in the health insurance sector, given the rising medical costs and aging population. The value for money in insurance is variable – some lines such as cyber risk have seen significant rate increases post Covid-19 because of huge claims and capacity constraints globally. We have been able to demonstrate to the insurers the best risk management practices followed in our organisation, which has helped us derive value for the money spent and ensured that we only faced a nominal increase in premium year on year. Apart from liability and health lines, in the past few years, commercial property insurance is a significant concern due to high frequency and severity of natural catastrophic perils leading to huge losses at various locations in India leading, in turn, to increasing premium costs. AL: How could and should the insurance market improve its service to customers in this complex and fast-changing environment, perhaps in claims? MP: The insurance industry in India needs to embrace digital transformation to enhance customer service. With rapid changes in the market, customers expect personalised, efficient, and accessible services. Many new age fin-tech-driven insurance companies are trying to create these personalised experiences for product offerings and settlement of claims. The focus is more towards retail policies, for which commercial policies are yet to see advancement in technology for settlement of claims, though a few insurers are using drones for surveys, which is a welcoming change. Insurance companies are sitting on a gold-mine of data and if that data can be analysed to create reports on the type of claims, location wise and via predictions on nat cat perils in the next decade or so, it would help organisations like ours in planning their risks and work towards business continuity planning better. AL: What is your strategy for alternative risk transfer? Do you use a captive and will you use it more? What would make captives more attractive to you as an option? Are you looking at using alternative solutions such as parametrics? MP: Alternative risk transfer (ART) as a risk management tool is evolving in India. Currently, Indian regulations do not allow for captives, but it has been gaining traction and we are hopeful that soon we should see positive moves in those directions. As a risk manager, we have used parametric risk solutions for seeking cover for our standing crops of coffee. If losses arise caused by excessive or insufficient rainfall or sunlight during the ripening period, we are covered under the policy. When we started the program three years back, the insurers insisted on the use of weather stations at various locations in the plantations. But because of advancements in technology, this is no longer required. The accurate data is readily available through companies like Skymet etc. As soon as the triggers are breached, the insurer’s systems send an alert about the claim under the policy, and the settlement happens within a fortnight. The entire process has become seamless and simplified. AL: What role could and should governments and international bodies be playing in the effort to bridge the insurance gap in the face of climate change? What is your company doing to become more resilient to climate change-related impacts such as flooding, wind and even supply chain challenges? MP: As climate change intensifies, governments and international organisations must work collaboratively with the insurance industry to bridge the protection gap. Regulatory support, risk assessment frameworks, and sustainable practices are key. By providing incentives, developing resilient infrastructure, and promoting risk-aware communities, governments can enhance insurance uptake and improve financial protection for Indian citizens. Governments and international bodies should also establish insurance pools, promote public-private collaboration, and support international cooperation to bridge the insurance gap. Companies must assess risks, implement adaptation strategies, and explore insurance coverage options to become more resilient to climate change impacts. As an organisation we have invested in resilient buildings, educating and creating awareness especially among on ground employees for the management of risks in case of events such as flash floods, cloud burst, fire etc. A dedicated helpline number has been provided to reach out in case of any such events. As an organisation, we have invested in business continuity plans (BCPs) to hedge the risks arising out of supply chain and other operational risks.

Holistic risk management on the rise in India: Pandit

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