Risk management
LEVERAGING AN INTEGRATED AND EFFICIENT RISK MITIGATION FRAMEWORK
In an evolving industry, it is imperative for Tata Communications to build an inclusive and prudent risk management framework that effectively evaluates threats and offers efficient mitigation strategies. Our ability to assess and address key risks empowers us to sustain hyperconnected ecosystems and build sound policies that aid agility and ensure business continuity.
The global economy continues to be exposed to macroeconomic challenges in the form of increasing inflation, climbing interest rates, fears of an upcoming recession and a looming debt crisis along with Europe’s Winter Energy Crisis and geopolitical issues (such as the Russia – Ukraine war, US-China tensions over Taiwan). Taking into consideration our global presence and our diverse portfolio of clients in different parts of the world, these challenges may have an adverse impact on our operations.
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Mitigation strategy
We diligently monitor evolving macroeconomic conditions and regularly undertake impact assessments to determine risks and its effect on our operations. Our resilient and agile business model enables us to adapt to changes in different geographies and enables us to mitigate risks efficiently. Additionally, our sound business continuity framework allows us to reduce the impact of unforeseen circumstances as well as empowers us to maintain and grow the business in a Capital linkage Material topic addressed profitable manner.
With increasing demand for internet connectivity and other services, traffic migration and revenue management has become a key concern, especially if the capacity on alternate cable routes are not available in time.
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Mitigation strategy
To prevent downtime and disruption of services, we have put in place alternative routes for ensuring business continuity.
Globally, enterprise transformation has become a necessity and most companies seek cost-effective methods to empower their digital infrastructure. Additionally, in the wholesale voice and data business segment, a significant amount of our revenues are generated from declining and low-margin carriers and service providers that are already reeling under pressures owing to existing low prices and continued price erosion. As a result, capital allocation for the telecom segment is often compromised and it might have an adverse effect on the Company.
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Mitigation strategy
Our continuous efforts to simplify and automate internal business processes enable us to ensure higher productivity and efficiency while rationalising the cost structure without impacting our service quality or delivery. To mitigate risks in the voice and data business, our focus remains on the enterprise segment. It not only helps us to ensure overall business growth, revenue and profitability, but also secures our position in a competitive market.
With new entrants in the industry and continuous changes in the operating arena, the inability to adapt to new methods and evolve with market dynamics may result in loss of market share and declining revenues.
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Our constant evaluation of the dynamic market enables us to stay a step ahead of competition. With constant technological upgrades and introduction of new, innovative and futuristic solutions, we are empowering a hyperconnected ecosystem through a digital fabric. It makes us a preferred partner for clients and empowers us with the ability to strengthen our position across geographies.
Reducing environmental footprint, ensuring optimum utilisation of scarce resources, and increasing consumption of renewable sources of energy have never been more important. It is also essential to comply with environmental rules and regulations. Our inability to sustain the high standards of environmental regulation might adversely impact our reputation and have financial implication.
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We are committed to ensure minimal impact on the environment. Our Environmental Management System (‘EMS’) conforms to ISO 14001:2015 standard. We also undertake periodic review of EMS to validate our commitments to national and regional laws.
We have defined the following sustainability goals:
- Carbon Neutral by FY 2030, and Net Zero by FY 2035
- Customer Emission GHG reduction potential of 20x by FY 2027
- 20% reduction in water consumption by FY 20301
- Zero Waste to Landfill by FY 2027
1 Compared to 2020
Our industry is evolving at a rapid pace and it is vital to retain and attract talent. The organisation’s inability to build an experienced and skilled workforce with specialised technical skills could negatively affect business prospects. Further, very high attrition rates and increase in lead times for onboarding of new and / or replacement of people may further aggravate risks.
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A highly skilled workforce with technical knowledge and expertise is imperative for the organisation. We, therefore, take great care to recruit and retain employees suitable for specialised roles. To ensure professional as well as personal growth of employees, we remain keen to foster a collaborative and inclusive working environment that supports diversity and respects every individual. We also train and nurture young minds to become future leaders, to take the organisation to greater heights of success. Our proactive policies to ensure the physical and mental wellbeing of employees also augurs well for our people.
Our operations are subject to local laws and regulations of the land. Any change in the regulatory framework, in regions where we operate, could adversely affect our business prospects.
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We have built an experienced and competent legal and compliance team which constantly works towards ensuring timely and transparent compliance with various laws and regulations. Further, our Board of Directors and senior management work together with our legal team to ensure regulatory, statutory and legal compliance in our processes, systems and operations. We abide by all applicable international and national laws and uphold the global standards of transparency and accountability
Given our vast operations, we are exposed to risks of volatile foreign currencies. We also have significant indebtedness in US dollars and Indian rupees. This results in variability in our interest costs. Additionally, to further expand our business, we depend on external capital markets for access to debt at economical rates. Our inability to raise and manage financial resources (long term and working capital requirements) might have an adverse impact on our operations.
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Mitigation strategy
We focus on maintaining an optimum mix of debt and equity to grow and fund our operations. We also monitor the risk of fund shortage with a liquidity planning tool which allows us to maintain healthy cash flow and liquidity in the form of cash and bank balance and unutilised banking limits. Further, we use derivative financial instruments and take advantage of natural hedging by entering into derivatives on net exposures, i.e, netting off the receivable and payable exposures.
