Last week's terrorist attacks in Mumbai raised new questions among many about the relative risk of doing business in India. This is particularly true for foreign businesses operating there, since the targets of the attacks were largely foreigners.
Reaction so far, however, appears to have been relatively muted. Many are limiting travel to India in the short term, but there is, correctly, little talk about India somehow becoming a location that will be taken "off the map" by multinationals. Indeed, our members have noted that while there has been some disruption to their India operations, by Friday of last week even in Mumbai offices were full and work continuing. In the words of one member: "Life goes on."
Although it's still relatively early and information continues to emerge, a few thoughts as conditions evolve:
1. Don't Over-React: There is at times a temptation to take high profile events such as last week's attacks and apply them wholesale to a country or situation. India is too important a market over the long term for companies to think this way. Indeed, it appears that most are taking a measured tone -- comparing this situation to the 2001 attacks in the United States or the 2005 attacks in London, where the overall impact was short-lived -- and pressing forward with their strategic plans for India, although naturally perhaps with a few new security considerations.
2. Don't Under-React Either: Violence in India is a growing concern, enough so that we had been researching the subject in preparation for our quarterly India Briefing. Before last week, India had already been rocked by 64 bomb blasts in less than six months this year, leaving more than 215 dead and over 900 injured, including events in major business centers like Bangalore and Delhi. Although in cases like the Mumbai blasts the motivations appear to have been linked to larger tensions between India and Pakistan, or Hindus and Muslims more generally within India, violence has targeted business interests in many cases to raise the profile of events and attempt to destabilize India's positive economic development. Companies need to be taking precautions in India, particularly in major urban centers, to protect their staff and their investments. Many do this already of course, but a review of procedures and benchmarking against practices in other high security urban areas (including places like New York and London) is worthwhile.
3. Assess the Entire Theater: Looking back at best practices we've featured across the Corporate Executive Board around how companies deal with risk, useful advice comes from our Information Risk Executive Council (IREC members can access a full case profile here). One profiled company found that its location risk assessments were too technical for enterprise-wide conversations, limited in scope, and ultimately inactionable. This company completely revamped the way it evaluates risks in different countries around the world, categorizing them into Business Assets, Cyber Threats, Political and Economic Threats, and Natural Hazards. By assigning risk levels to each of these categories, they're able to make a holistic risk evaluation, and identify areas needing additional investment when decisions are made to build or expand operations in a given location. They're also able to better track changes over time and ensure their investments and practices are keeping pace.
One potentially positive outcome of these events is that they will intensify pressure on Indian authorities to take more aggressive steps to prevent militant attacks like this. Criticism of India's overall preparedness for crisis response is mounting from both the business community and local and international political circles, and some accountability has already begun with resignation of India's Home Minister.
The high-level point here is to stay alert, in India and frankly wherever you operate. Use this as an opportunity to add depth to your overall risk evaluation of India and other international locations where you do business. This is probably a particularly good time to do this, as economic volatility can at times lead to political and social instability as well.
