You are here: Home » Companies » Results
Business Standard

ICICI Lombard sets up index to track risk exposure in sectors, companies

Indian companies have a score of 57, indicating optimised risk handling methods, says the index

ICICI Lombard | financial services | Insurance

Subrata Panda  |  Mumbai 

ICICI Lombard
File photo: ICICI Lombard's risk index is arrived after calculating the corporates’ exposure and management of various risks

Private sector general insurer has come out with a corporate India risk index, an indicator of a company’s risk exposure and preparedness. It spans across 15 sectors of the economy and has 150 under it, currently.

According to the index, India Inc’s score is 57, which implies that firms are handling risks effectively. However, at a more granular level, the index indicates that new-age companies, and those in hospitality and logistics sectors could do a lot more in terms of handling risks.

are mostly engaging with operational and natural hazard risks because of the pandemic. But, there needs to be an improvement in managing economic, technological, and security risks.

The risk index is arrived at after calculating the corporate house’s exposure and management of various risks. Across sectors, this index looks at market and macro factors, operational and physical risks, risks related to technology, security, and those associated with natural hazards.

A score in the range of 50-60 indicates optimal risk exposure and management. A score in the range of 30-50 implies that the corporate house is not handling risk effectively and management practices are inefficient.

Similarly, a score below 30 means the company has very high exposure or very poor risk management practices or both. On the other hand, a score of 60-80 implies effective risk management and practices, while a score beyond that implies that the company has invested heavily in risk mitigation.


New-age companies, and those in hospitality and logistics sectors have scores in the range of 30-50. Hence, they have significant gaps in risk management practices.

Sectors such as automotive, manufacturing, realty and infra, chemicals, FMCG, pharma, energy, and metals and mining have scores in the range of 50-60, which means though they handle operational and physical risks well — except for chemical and pharma sector where risks are more intrinsic — they need to focus more on market, economy, and strategic risks.

Healthcare, BFSI (banking, and insurance), IT and ITES, and media and telecom are the sectors where risks are handled effectively. Although the BFSI sector has very high exposure to risk, firms are relatively better at managing such risks.

“Over the past 10 years, we have been looking at risk in a much broader perspective than of What we have seen is, India Inc has made significant progress in understanding and appreciating the risks they are living with and taking action in addressing them,” said Bhargav Dasgupta, MD&CEO, General

On whether the company will use this index to base its premiums for corporate policies it sells, Dasgupta said, while it is not immediately co-related to premiums but the thought process is, in the long term this will definitely help the corporates in saving cost of protection.

“We want to encourage superior risk management. The insurance business is to protect policyholders against any kind risk. Hence, it will be a net win for both the insurer and the company that is getting insured if both work together in reducing the inherent risk. So, which are managing their risk in the superior bucket are the ones who will build a sustainable business from a risk perspective,” he added.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, February 11 2021. 19:19 IST