Strategic Risk Assessment

🔴 Vizag Steel Plant on the Brink of Shutdown: A Wake-up Call for India's Steel Industry A significant moment in Indian steel industry history is unfolding as Rashtriya Ispat Nigam Limited-Visakhapatnam Steel Plant (RINL-VSP) faces a looming total shutdown. The closure of Blast Furnace-3 Annapurna on September 12, 2024, marks the second furnace closure this year, with BF-1 Godavari already down since March. Now, only one functional furnace remains, and with coking coal stock expected to last merely five to six days, the plant is on the verge of halting production completely—a first since its inception in 1982. The reason? A crippling shortage of raw materials, primarily coking coal, compounded by a lack of funds. The plant, which requires at least 14,000 tonnes of coal daily to maintain production, is left with a mere 20,000 tonnes in stock, far below the necessary 45-day buffer of 6.3 lakh tonnes. This critical juncture raises serious questions about the future of one of India's oldest steel plants and highlights broader concerns in the steel industry, including supply chain vulnerabilities and the urgent need for strategic planning in resource management. As production halts at RINL-VSP, the consequences will ripple across the local economy, impacting workers, suppliers, and the industry as a whole. This could be a tipping point for stakeholders to reevaluate the long-term sustainability of steel production in India, especially in the face of raw material shortages and financial constraints. We must collectively look for solutions to ensure that RINL-VSP, a critical player in India's steel sector, does not succumb to these challenges. #SteelIndustry #VizagSteelPlant #SupplyChainCrisis #RawMaterials #CokingCoal #IndianSteel #ManufacturingCrisis #Sustainability #Infrastructure

Sustainability Risk Management Framework 🌎 This framework, adapted from Deloitte and illustrated by Antonio Vizcaya Abdo, presents a clear and structured approach to managing climate-related risks and opportunities in business. As sustainability becomes integral to decision-making, frameworks like this are increasingly essential for ensuring long-term resilience and value creation. The process begins with strategic alignment. It is crucial to evaluate future investments, clarify roles and responsibilities, define risk appetite, and ensure alignment with broader objectives such as the Sustainable Development Goals (SDGs). The next step focuses on identifying and prioritizing climate-related risks and opportunities. This involves collecting data, consulting stakeholders, defining objectives, and analyzing both physical and transition risks as well as emerging opportunities. A key strength of this framework lies in its integration of metrics, targets, and risk management processes. This ensures that assessments are not isolated but embedded in the organization’s broader strategy and governance structures. Once risks and opportunities are identified, the framework shifts to response design. This phase involves creating tailored mitigation actions and seizing opportunities through short-, medium-, and long-term solutions. To support these actions, the development of key risk indicators (KRIs) is essential. These indicators provide the means to track progress, adjust strategies, and maintain accountability across functions and business units. The final step emphasizes communication and transparency. Whether through standalone reports or integrated sustainability disclosures, clear communication of findings and progress is essential to meet stakeholder expectations and regulatory demands. Effective sustainability risk management is not just about protecting value—it is also about enabling new forms of growth, innovation, and resilience in a changing climate context. Frameworks like this offer a pathway to move from intention to implementation, turning risk into strategic opportunity through structure, foresight, and rigor. #sustainability #sustainable #business #esg #risks

⛈️ 𝐂𝐥𝐢𝐦𝐚𝐭𝐞 𝐑𝐢𝐬𝐤 𝐌𝐞𝐭𝐡𝐨𝐝𝐨𝐥𝐨𝐠𝐲 𝐁𝐚𝐬𝐞𝐝 𝐨𝐧 𝐎𝐩𝐞𝐧-𝐀𝐜𝐜𝐞𝐬𝐬 𝐓𝐨𝐨𝐥𝐬 🗺️ Over the past months, I shared lists of open-access climate and nature risk assessment tools. They sparked quite some interest. Here’s how I thought I might provide additional value: ➡️ A practical Excel methodology for assessing climate risk based on open-access geospatial tools. For every risk category required by the EU Taxonomy, the Excel links to the best assessment tool. 🔥🌡️ This initial release focuses on temperature-related physical risks like heat stress and wildfires. Updates on additional risk categories are forthcoming. 𝐖𝐡𝐚𝐭’𝐬 𝐢𝐧𝐬𝐢𝐝𝐞: 🗺️ Open-access geospatial tools for assessing each temperature-related risk 📊 A conclusive methodology to assess company sites and supply chains 📝 Additional guidance for smooth assessment and reporting in line with EU Taxonomy and CSRD, including descriptions and instructions for each tool 📈 Based on the latest climate models and data by organizations like the IPCC. I hope this will save ESG teams substantial time and money in their search for adequate data and methods. 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭𝐞𝐝 𝐢𝐧 𝐭𝐡𝐞 𝐫𝐞𝐬𝐨𝐮𝐫𝐜𝐞? Comment below, and I’ll send it your way. (Please connect so I can message you directly.)

"We analyzed nearly 460,000 AI model cards from Hugging Face to examine how developers report risks. From these, we extracted around 3,000 unique risk mentions and built the AI Model Risk Catalog. We compared these with risks identified by researchers in the MIT Risk Repository and with real-world incidents from the AI Incident Database. Developers focused on technical issues like bias and safety, while researchers emphasized broader social impacts. Both groups paid little attention to fraud and manipulation, which are common harms arising from how people interact with AI. Our findings show the need for clearer, structured risk reporting that helps developers think about human-interaction and systemic risks early in the design process."

BCG just published a guide on climate risk for CEOs. Not a climate nonprofit. Not a startup's blog post. BCG — the consultants your CEO pays 8 figures each year for advice. They're not known for poking political bears. So when they write that companies treating value chain resilience as "nice-to-have" will be outmaneuvered by those who treat it as strategic priority, it's worth paying attention. The headline number is $320B in economic losses from natural disasters in 2024. But here's the thing about big scary numbers — they're almost too big to act on. They feel like someone else's problem. The real insight is buried deeper: A flood at one second-tier supplier's facility can halt your production for weeks. Persistent water scarcity in a region you've never visited can force you to overhaul your entire sourcing model. Most companies have no idea where their suppliers' suppliers are located, let alone whether those facilities sit in flood zones or drought-prone regions. BCG's point: The companies that win won't just assess their own assets. They'll map climate exposure across their entire value chain — and partner with suppliers to build resilience together. If you've been trying to get your leadership team to take physical risk seriously, forward them this article. It's not coming from the sustainability team. It's coming from the consultants they're already paying. https://lnkd.in/eZRgN9-H

IS YOUR INCIDENT CLASSIFICATION PROCESS CAUSING YOU TO MISS OUT ON LEARNING? Last week, I was reviewing incident data with a client. We had meticulously categorized every event by its actual outcome—minor injury, major injury, property damage. But when I asked about a near-miss involving someone who fell from a 6-foot ladder and walked away unscathed, it barely registered a mention. "Nothing happened," is what they told me. "No one got hurt." That's when I realized that we're still trapped in outcome-only thinking—and it's costing us our most valuable safety insights. Traditional incident classification asks one question: "What was the result?" But progressive organizations around the globe are asking a fundamentally different question: "What could have happened?" After working in mining, oil and gas and construction for over 15 years, I can tell you that investigational level at every organisation I worked for, was always based on actual severity never the potential severity. So this shift for me is profound and one that is definitely needed. Research from my friends Matthew Hallowell, Sid Bhandari and the rest of the team at the Construction Safety Research Alliance and Edison Electric Institute is showing that organizations using SIF (Serious Injury and Fatality), PSIF (Potential SIF) classification frameworks are identifying systemic risks that outcome-only approaches miss entirely. Think about it: A worker falls from a ladder. In traditional classification, the severity of their actual injury determines the investigation depth. But in potential-based classification, we ask whether high-hazard energy was present that could have caused life-altering harm, regardless of the lucky outcome. The difference between these approaches isn't academic—it's about the difference between being good and being lucky. When we focus on potential rather than just outcomes, we start seeing patterns in our near-misses that reveal the same systemic weaknesses that might also be present with our serious injuries. We stop treating the person who walks away from a 6-foot fall as "no incident" and start treating it as a learning opportunity into our fall protection systems, training effectiveness, and risk assessment accuracy. I've watched organizations make this shift, and the results are remarkable. They start investigating high-potential events with the same rigor as actual injuries. They identify control failures before they cause harm. They move from reactive firefighting to proactive risk management. The most powerful insight though is this- Every PSIF is a SIF that didn't happen this time. And luck, as we know, is not a safety strategy. Are you still classifying incidents by what happened, or have you evolved to focus on what could have happened? What potential-based insights is your organization missing?

The problem of underinsurance among businesses, especially SMEs, is often framed as a simple cost-saving versus risk trade-off. However, this oversimplification ignores the intricate factors leading businesses to underestimate their vulnerabilities and the devastating ripple effects of being caught unprepared. A concerning report mentioned that 85% of MSMEs in India are uninsured! Moreover, many insured businesses have taken a policy only because it is mandated by a regulatory. Adding to this issue, I have witnessed multiple businesses that use insurance as a risk mitigation tool find their policy useless with inadequate coverage when facing a complex claim. Hidden liabilities are probably the most common reason behind such situations. Businesses are lulled into a false sense of security, only to discover the gaping holes in policy exclusions once a disaster strikes. The worst part is that such losses don't happen in a vacuum. Underinsured companies delay supplier payments, miss payroll obligations, and break contracts due to extended downtime. This sends tremors through the entire network they rely on. The true cost goes beyond immediate losses. It leads to stalled growth, lost opportunities while scrambling to recover, and a tarnished reputation that lingers long after the initial crisis. There’s a lot businesses can do to avoid such situations. The problem is not limited to saving costs on low premiums with inadequate coverage, or lack of awareness. The problem lies in bad strategic decisions. Many businesses, especially those with substantial tangible assets, underestimate the complexity of valuation in the modern economy. Outdated valuations often focus on physical assets – property, equipment. But what about lost revenue during downtime, the cost of data recovery after a cyber attack, or reputational damage that impacts future deals? Let’s unfold more layers. Businesses that depend on a network outside their direct control may have standard insurance coverage. But what do they do when their vendors are uninsured and suffer a major disruption? Managing risks in a volatile market isn't a simple accounting exercise. It needs to account for sector-specific risks and evolving threats to arrive at the true level of insurance protection required. Here's where a mindset shift is crucial. Treat your broker as a translator, not just a seller. Insist on plain language explanations of exclusions, and actively model how different policy options play out in 'worst-case' scenarios. Negotiate customisation to factor in that worst-case scenario, and be prepared to pay a premium for it. Use annual meetings to present changes in your business – new markets, technological shifts – and demand the insurance evolves in step. Indian businesses can't afford to view insurance as a sunk cost. It's an investment in securing the future. Take command of your risk profile and quantify the unknown to fill potential coverage gaps. Policybazaar For Business

“What would have to be true?” Most strategy sessions focus on what’s already true. But great strategy comes from flipping the script. The Playing to Win framework from gives us the tool: “What would have to be true for this strategy to work?” Why it works: • It makes assumptions visible • It turns debates into hypotheses • It separates the “must-haves” from the “nice-to-haves” • It directs focus to what’s uncertain and critical In other words → it makes your strategy testable. Some practical ways to use this: 1. Ask: “If this wasn’t true, would we still proceed?”   ↳ If yes, it’s not essential. Move on. 2. Label assumptions:   ↳ Proven, likely, uncertain.   ↳ You can’t test everything—prioritise. 3. Use structure to clarify:   ↳ Group assumptions by customers, competition, capabilities, and cost. 4. Attack the riskiest assumptions first   ↳ Reduce the most significant uncertainties early. 5. Treat strategy as a learning journey   ↳ You’re not betting on being right. You’re betting on learning fast. This question isn’t just smart—it’s transformative. It doesn’t predict the future. It helps you design it. Managers, next time you plan... Start with: “What would have to be true?” P.S. Which question changed the way you think about strategy?

Geopolitical Risk Outlook 2026 — Board Brief (Public). This note is inspired by and grounded in Foreign Policy’s recent analysis, “10 Conflicts to Watch in 2026.” I’m not summarising that article, I’m translating it into consequences that matter for those who sit on boards. If useful, feel free to pass it on. Across regions, conflict dynamics are hardening rather than resolving. In Venezuela, renewed U.S. pressure reintroduces coercive regime-change risk, turning energy exposure binary and subordinating fundamentals to politics. In Sudan, civil war is consolidating into de facto partition, reinforcing a hard lesson: humanitarian engagement does not equate to sovereign or infrastructure stability. In the Horn of Africa, Ethiopia–Eritrea tensions layer interstate conflict risk on top of unresolved internal fragmentation, placing trade corridors, food security, and IMF-supported reform programs under duration stress. The Sahel, south of Sahara Desert, illustrates a wider pattern relevant to investors and operators: militarised governance combined with insurgent pressure erodes state authority without restoring order. The result is asymmetric security risk for mining, logistics, and physical assets. Ukraine remains a war of attrition, but the more durable consequence is structural — Europe’s security architecture is being rewritten, reshaping decisions around defence, energy resilience, and reconstruction. In the Middle East, Syria’s fragile transition underscores a recurring fallacy: sanctions relief and diplomatic normalisation do not automatically create investability. Israel–Palestine, despite Gaza ceasefire, has entered a phase of persistent instability with direct legal, reputational, and ESG implications for firms. Escalation risks involving Iran and the Houthis continue to inject volatility into energy and shipping markets, with insurance costs providing an early signal that tail risks remain underpriced. In Asia, Myanmar’s military consolidation has stabilised the regime without resolving civil war, highlighting the gap between political normalisation and social legitimacy. Along the Afghanistan–Pakistan border, sustained cross-border militancy keeps escalation risk alive between nuclear-armed states, anchoring risk premium in geopolitics rather than macro cycles. Taiwan is notably absent from most 2026 watchlists — intentionally. A conflict there would be system-shattering for semiconductors, trade, finance, and alliances. Precisely because the consequences are catastrophic, deterrence still holds, however uneasily. For 2026, Taiwan is best understood not as a timing call, but as a design constraint shaping supply-chain redundancy, capex duplication, inventory buffers, and alliance assumptions across Asia. Bottom line: 2026 is about distinguishing between risks that can be priced, those that must be actively managed, and those that should not be owned at all. #GeopoliticalRisk #CapitalAllocation #BoardPerspective

Over-Estimation in EVE Assumptions: The Perilous Path to Financial Instability Economic Value of Equity (EVE) is an essential metric in banking, employed for gauging the long-term financial stability of an institution. It serves as a cornerstone in the management of Interest Rate Risk in the Banking Book (IRRBB). However, the accuracy of EVE is highly contingent on the assumptions made during its calculation, particularly those related to asset and liability behaviours. Over-estimating these assumptions can lead to a distorted view of financial health, carrying significant risks that may even culminate in the collapse of a bank. The Consequences of Over-Estimation: 1. Liquidity Risk: One of the most immediate dangers of over-estimating assumptions in EVE is the potential misjudgment of liquidity needs. Optimistic assumptions about deposit longevity or loan prepayments can lead to an overestimation of available funds, making the bank susceptible to liquidity shortages. 2. Capital Adequacy: Over-estimation can also give a false sense of security regarding the capital buffer. If assumptions about asset performance are too optimistic, the institution may not hold sufficient capital to absorb losses, breaching regulatory requirements. 3. Strategic Flaws: Exaggerated positive assumptions can skew strategic decisions, such as pricing of loans or deposits, product offerings, and risk-taking behaviour. This can be detrimental to the bank's competitive position and profitability in the long term. 4. Stress Testing: Over-optimistic assumptions will also affect the results of stress testing exercises. These exercises are designed to evaluate how an institution can cope under adverse conditions; therefore, a false sense of security can severely undermine crisis preparedness. The Collapse Risk: The most dire outcome of these compounded issues is the risk of financial instability leading to a collapse. If the bank consistently over-estimates assumptions, it will find itself in a precarious position with inadequate capital and liquidity, while being ill-prepared for market shocks. In the worst-case scenario, the lack of realistic planning can trigger a loss of confidence among investors and depositors, accelerating the path to insolvency. The Importance of Prudent Assumptions: Given these significant risks, it is prudent to approach EVE assumptions with caution. Continuous monitoring and back-testing are essential for ensuring that the assumptions are as realistic as possible. Sensitivity analysis should also be undertaken to understand the impact of various scenarios on EVE, thus enabling more effective decision-making. In essence, the accuracy of EVE relies heavily on the validity of underlying assumptions. Over-estimating these can lead to a cascade of issues that might render a bank financially unstable. Therefore, it is essential to maintain conservative estimates and regularly reassess them to prevent such devastating outcomes.