Geopolitical instability has rapidly emerged as the most significant threat facing Indian businesses, according to a new report highlighting a shift in the risk landscape. The ‘Global Risk Atlas – New Realities’ report by MGC Global Risk Advisory reveals that nearly half of all Chief Experience Officers (CXOs) in India now consider geopolitical risks the most severe challenge over the next five years. This signals a critical need for Indian companies to bolster their resilience in a world marked by increasing uncertainty.
Geopolitical Risk Tops Concerns for India Inc.
The MGC Global Risk Advisory report, based on insights from over 125 CXOs across 45 economies and diverse sectors like manufacturing, BFSI, and digital services, paints a clear picture: the world is entering an era of “permacrisis.” This isn’t a single, dramatic event, but rather a state of chronic and interconnected risks. Specifically, 50% of Indian CXOs identified geopolitical risk as the biggest future threat, surpassing concerns like economic downturns or regulatory changes.
This heightened awareness stems from a confluence of global events – ongoing conflicts, trade tensions, and shifting alliances – all contributing to a more volatile and unpredictable international environment. Indian companies, increasingly integrated into the global economy, are particularly vulnerable to disruptions in supply chains, fluctuations in commodity prices, and shifts in international capital flows.
Impact Across Sectors
While all sectors are affected, the report highlights that multinational companies, manufacturers, and Business-to-Business (B2B) firms are at the highest risk. These businesses are heavily reliant on cross-border capital, energy supplies, and complex global supply chains. Domestic firms aren’t immune, however, facing indirect impacts through currency fluctuations, commodity price volatility, and changes in consumer demand. This underscores the need for a broad-based approach to risk management across the entire Indian corporate landscape.
The Rise of Cybersecurity and AI Governance
Beyond geopolitical risk, the report identifies other key areas of concern for Indian businesses. Cybersecurity has surged in importance, now exceeding physical security as a primary focus for board-level risk control. A significant 59% of business leaders cite cyberattacks and data breaches as a top concern, reflecting the growing sophistication and frequency of these threats.
This shift is understandable given the increasing reliance on digital infrastructure and the potential for devastating financial and reputational damage from successful cyberattacks. Companies are realizing that protecting their digital assets is no longer a purely technical issue, but a critical business imperative.
Additionally, the report notes a significant change in boardroom priorities: AI governance is now taking precedence over Environmental, Social, and Governance (ESG) factors. This isn’t to say ESG is being ignored, but the immediate concerns surrounding Artificial Intelligence – including model bias, the spread of misinformation, and the lack of clear regulatory frameworks – are driving a more urgent response. Businesses are grappling with how to responsibly deploy AI technologies while mitigating potential risks.
Building Institutional Resilience: A New Approach to Risk
Monish Gaurav Chatrath, Managing Partner at MGC Global Risk Advisory, emphasizes that the convergence of geopolitical risk, technological disruption, and macroeconomic realignment demands a fundamental shift in how companies approach risk management. He argues that the traditional, episodic response to crises is no longer sufficient.
Instead, companies need to build “institutionalised resilience” – a proactive and integrated approach to identifying, assessing, and mitigating risks across all aspects of their operations. This involves investing in robust risk management frameworks, diversifying supply chains, strengthening cybersecurity defenses, and developing a culture of preparedness.
Talent and Digital Capabilities: Critical Gaps
The report also reveals significant gaps in talent, innovation, and digital capabilities within Indian companies. Nearly two-thirds acknowledge these shortcomings, which could amplify the impact of future shocks. Addressing these gaps is crucial for building the resilience needed to navigate the evolving risk landscape. Investing in upskilling and reskilling programs, fostering a culture of innovation, and embracing digital transformation are all essential steps.
Navigating the “Permacrisis” – A Call to Action
The ‘Global Risk Atlas – New Realities’ report delivers a stark warning: Indian companies have entered an era of persistent and interconnected challenges. Geopolitical risk is the most pressing concern, but it’s inextricably linked to cybersecurity threats, the need for responsible AI governance, and the imperative to address internal capability gaps.
Successfully navigating this “permacrisis” requires a proactive, holistic, and long-term approach to risk management. Indian businesses must move beyond simply reacting to crises and instead build the institutional resilience needed to thrive in a world of constant change.
This report serves as a valuable resource for business leaders, policymakers, and risk professionals seeking to understand and prepare for the challenges ahead. Further discussion and strategic planning around these findings are crucial for ensuring the continued growth and stability of India Inc.
