Changing risk profiles of E-commerce and Start-ups in the post COVID-19 world

Digitization has opened up numerous avenues on one hand, and on the other, calls for risk management strategies to tackle the onslaught of growing technology endeavours.  Deemed as a necessary evil, it is imperative for e-commerce companies and start-ups to redefine risks in the post-COVID-19 environment. To comprehend risk management practices in an era of innovation and novel initiatives, ICICI Lombard and CNBC-TV18 curated the “Risk Masterclass 2021”.  It is a special initiative under the aegis of India Risk Management Awards that recognizes India’s leading organizations that have taken the lead in managing business risks.

The show started with an executive address by Mr. Yash Parashari, Vice President, Structured Products Group, ICICI Lombard General Insurance.  Yash highlighted the importance of disruption, talent acquisition, working within the confines of government-laid regulations, and adoptability.  He concluded by speaking about the need for collaboration between start-ups and legacy organizations.  He added, “Start-ups have taken a disruptive approach to weed out inefficiencies and hence a collaborative approach between start-ups and legacy companies can actually create much larger economic value”.
 
The address was followed by a keynote speech by Mr. Vivek Gupta, Co-founder, Licious, he began by stating how the entire entrepreneurial journey is a risk in itself, for most people who leave the comforts of a stable job to pursue their passion. He went on to share his foray into the meat industry with Licious’s unique proposition and redefined quality standards in a disorganized sector.  While the product delivery is completed in 90 minutes, Vivek explained the complex web of the supply chain backend process and how it moves in a span of 24 hours.  He exclaimed, “The character of an organization is best seen when nobody is looking”.  He stated with pride that for the past 6 years Licious has been adhering to strict food safety and hygiene norms, which have now been made have become mandatory only now due to COVID-19.  Vivek shared his secret mantra of success, which is to abide by best industry practices and reap rich benefits in the long-run. His message to the audience was “Build organizations in such a way that brands or companies outlast all of us”.
 
An interesting panel discussion ensued, comprising Industry representation, Paromita Chatterjee, special correspondent, CNBC-TV18 spoke to Anuj Bhansali, Head, Trust & Safety, Phone Pe, Sandeep Goradia, Head Corporate Solutions Group, ICICI Lombard General Insurance and Mr. Shan, Chief Growth Officer at JusPay.  Sandeep shared heartening statistics on India’s digital story where the internet penetration has gone up by more than 12 crores and the aggregate numbers have touched almost 100 crore users. Out of the entire user base, almost 40% belong to rural India.  50000 odd start-ups have registered, and each month newer start-ups are coming into the ecosystem and almost 20% or more in the e-commerce space are already active.  
 
Anuj stressed how Phone pe ensures complete data security of customers and explained how they have built robust in-house risk systems that oversee every aspect of Phone Pe.  Another interesting development undertaken by the company is a zero-trust model, to ensure that safety protocols are not an afterthought but a well-planned strategy to avoid unforeseen risk scenarios.  Mr. Shan shared the guiding principles that are at work at JustPay, firstly, creating multiple layers and independent barriers, secondly, granularity, and lastly minimizing data exposure. Shan further divulged the privilege of being a payment tech company in India since India has been a pioneer for enforcing two-factor identification and tokenisation, which is going to be an important step towards information privacy and security.

Following the tenets of simplification and implementation, Anuj mentioned how Phone Pe has automated most of its customer queries with the use of technology rather than deploying manpower.  And a similar approach is adopted for risk management.  Phone pe has also built real-time decision-making systems, he said, “Our approach has always been technology first so that we are able to build and scale for the billions of transactions that we process”.
 
On the flipside, Anuj talked about how risk management is still viewed as a cost function by most companies.  He feels that unless the risk systems are geared to enable growth they will always be seen as an impediment, and this needs to change. Drawing an analogy about the same he quoted, “Drive a car as fast as you want to, if you know the brakes are something that you can control and I believe the risk engine is something that helps the business grow because those are the brakes”.
 
Sandeep spelling out how at ICICI Lombard, clients are placed in three distinct buckets, from large-scale organizations, middle-level corporate houses to the new start-ups, and customised solutions risk management solutions are created to cater to each of their requirements.   Summing up the discussion each panelist agreed that risk cannot be viewed as an afterthought and the role of risk managers needs to be accorded the status of a partner in this precarious journey.

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