Published on July 19, 2023
In order to address emerging risks, Tata Communications and Tata Projects were seeking best practices in scenario planning/sensitivity analysis and their alignment to top risks. The two companies aimed to obtain clear guidelines around scenario planning (forex, interest rate volatility and environment risk scenarios), sensitivity analysis and use cases for effective implementation of learnings. To support the two companies in their improvement initiatives, Tata Business Excellence Group (TBExG) facilitated a best practices sharing session on June 8, 2023.
During the session, Vishal Agrawal, Chief, Enterprise Risk Management, and Gaurav Prakash, Senior Manager, both from Tata Steel shared their practices on the subject with the two companies. In addition to discussing Tata Steel’s ERM governance structure and the building blocks for driving an intelligent risk culture, they showcased the decentralised model of Tata Steel where risk ownership rests with over four hundred risk owners. Furthermore, the duo threw light on the how scenario planning was done at Tata Steel for the year 2035. This comprised of identification of key uncertainties for the steel sector, leveraging four-quadrant analysis to identify most critical uncertainties, mapping EBITDA situation of the company in each of the identified scenarios, and instituting mitigants to tide over the identified risks. Additionally, Sanjay K Mathur of Tata Communications shared the practice followed by Tata Communications from identification to mitigation of key risks.
Both Tata Communications and Tata Projects gained valuable insights on scenario building for enhancing their annual planning exercise, presenting to the Board and Risk Committee on various scenarios and the implications on the financial performance of the company.
Participant speak
Scenario planning and sensitivity analysis-related practices can aid risk identification and risk assessment steps respectively. It can bring known-unknown risks in the realms of consideration. It also helps in risk quantification by plotting ranges of impact, possible in case of risks playing out. It was a useful session to understand how to bring focus on limited strategic risks which are largely driven through external factors like interest rate, commodity prices, currency exchange rates, GDP growth rate, etc. Thanks to Tata Steel’s team for very lucidly presenting and thanks to the Tata Business Excellence Group team for facilitating the interaction.
— Ritesh Joshi, Head - Enterprise Risk Management, Tata ProjectsThe session was very insightful especially the approach followed for scenario and sensitivity analysis for some of the external driven risks.
— Sanjay K Mathur, Vice President - Governance, Risk Management and Compliance, Tata Communications