The risk conundrum: Crafting strategy amidst macroeconomic uncertainty

Risk management, long the domain of actuarial precision and boardroom projections, has become a high-stakes game of chess in an increasingly unpredictable macroeconomic environment. Inflation spikes, interest rate volatility, supply chain disruptions, and regulatory flux are no longer transient concerns—they are the defining features of a new economic reality.

For CFOs and risk leaders, the challenge is twofold: mitigating exposure to immediate shocks while architecting strategies that ensure long-term resilience. This balancing act, already complex, is further complicated by the rise of non-financial risks—ESG compliance, cybersecurity vulnerabilities, and geopolitical instability—all of which have financial repercussions.

Speaking to CFO India, Anirban Thakur, Vice President – Finance and Head of Treasury at Birlasoft, and Karun Kumar, Assistant Vice President – Governance and Risk Control at V Mart, offer a glimpse into how finance leaders are recalibrating their approach to risk.

Inflation, interest rates, and currency volatility: A CFO’s balancing act

For many businesses, inflation and currency fluctuations are existential threats. In India, where the rupee has witnessed periodic depreciation, exporters find themselves benefiting from a weaker currency—at least in the short term. Thakur notes that Birlasoft, as a net exporter of IT services, benefits from a depreciating rupee when converting dollar revenues into Indian rupees. However, he is quick to point out that the advantage is temporary:

“The rupee weakening helps us in the short term, but we cannot assume this trend will persist indefinitely. Our board-approved hedging policy ensures that 65-70% of our receivables for the next year are covered, allowing us to mitigate any sharp reversals in currency movement.”

Hedging, it appears, is now a necessity rather than a discretionary tool.

For V Mart, a retail player exposed to inflation and interest rate volatility, financial planning has had to incorporate pricing flexibility without eroding customer trust. Kumar emphasises that passing on cost inflation to consumers is simply not an option:

“Retail is highly price-sensitive. Customers will not bear the full burden of rising input costs, so we have to optimise inventory, manage supplier relationships, and fine-tune our pricing strategy to maintain profitability without alienating our customer base.”

This underscores a critical reality: while financial hedging can protect companies from currency volatility, inflationary pressures require a more fundamental shift in operational and procurement strategies.

The rise of non-financial risks: ESG and cybersecurity as core pillars

Traditional financial risk management models are no longer sufficient. ESG compliance, regulatory shifts, and cybersecurity threats have emerged as strategic priorities for CFOs.

For Birlasoft, non-financial risks are now embedded into the organisation’s broader risk framework. Thakur highlights the growing role of ESG in risk assessment:

“We now have a dedicated ESG team led by a senior executive. ESG risk is treated with the same seriousness as financial risk, and we have a structured approach to statutory compliance, reporting, and risk mitigation.”

The increasing regulatory scrutiny around ESG disclosures has made this shift inevitable. New sustainability reporting standards such as IFRS S1 and S2 demand greater transparency, requiring companies to integrate ESG risks into their overall risk matrices.

Cybersecurity, too, has transitioned from being an IT function to a boardroom priority. The increasing sophistication of cyber threats has prompted firms to rethink their security infrastructure. Thakur explains how Birlasoft is adopting a zero-trust security framework:

“We have implemented passwordless authentication, multi-factor authentication (MFA) mechanisms, and cloud security upgrades to mitigate cyber risks. Additionally, our cybersecurity insurance policy ensures we have financial cover in case of a breach.”

Such measures reflect a growing recognition that cybersecurity failures can have severe financial and reputational consequences.

Scenario planning and AI-driven risk modelling

With unpredictability now a constant, finance leaders are investing in advanced analytics and scenario planning to enhance decision-making. AI and machine learning, often seen as theoretical tools, are slowly finding practical applications in risk mitigation.

Kumar admits that while V Mart is making sustained progress in AI adoption, the company is yet to achieve full-scale maturity:

“We are using AI-driven models to analyse large datasets, detect emerging risk patterns, and refine our forecasting mechanisms. While we are still refining our approach, the goal is to transition from reactive risk management to proactive scenario planning.”

For Birlasoft, AI has already enhanced cash flow forecasting and fraud detection:

“By leveraging AI, we can automate scenario analysis and integrate real-time data to improve decision-making. This is especially valuable in forecasting cash flow deviations and potential liquidity risks.”

The shift towards data-driven risk management signals a fundamental transformation in how organisations approach uncertainty.

Embedding risk awareness into organisational culture

Beyond technology and financial instruments, risk management must be embedded into an organisation’s culture. Kumar stresses that risk cannot be confined to boardroom discussions:

“Risk management is not a theoretical exercise. It must be ingrained into the daily operations of every function. This requires continuous training, awareness programmes, and cross-functional collaboration to ensure that employees at all levels understand their role in managing risk.”

V Mart has introduced regular risk maturity surveys and integrated risk KPIs into performance management systems, reinforcing the idea that risk awareness is not the exclusive domain of the CFO’s office.

Lessons from the past: A blueprint for future resilience

Economic downturns have historically served as stress tests for corporate risk frameworks. Thakur reflects on past crises and the importance of business continuity planning:

“One of our key lessons from the COVID-19 pandemic was the need for rapid response mechanisms. Within days of lockdowns being imposed, we had enabled VPN connectivity and provided employees with remote work capabilities. The ability to act swiftly during crises is a crucial aspect of risk management.”

Kumar echoes this sentiment, underscoring the importance of agility in financial strategy:

“It is impossible to predict every possible risk event, but organisations that have built resilience into their core will always be better equipped to navigate uncertainty. Business continuity planning is no longer a ‘nice to have’—it is a fundamental requirement.”

The road ahead: A more sophisticated approach to risk

As macroeconomic uncertainty persists, finance leaders must rethink their approach to risk management. The future will demand a more sophisticated blend of financial discipline, technological adoption, and cultural transformation.

From hedging against currency volatility to embedding ESG and cybersecurity into risk frameworks, finance leaders must be prepared to operate in a world where the only certainty is uncertainty.