Unveiling Tech-Driven Strategies for Financial Security

Shalinee Mimani

With the widespread use of digital technologies and the increasing amount of sensitive information being stored and transmitted online, protecting data from unauthorised access, disclosure, alteration, and destruction, is imperative, shared Shalinee Mimani, Chief Risk Officer, Godrej Capital, in an exclusive interview with Srajan Agarwal of Elets News Network (ENN).

In the dynamic landscape of financial risk management, how has Godrej Capital Limited strategically addressed and adapted to the evolving security challenges, particularly in areas such as cybersecurity and data protection?

As a tech-first company, Godrej Capital has ensured robust risk management practices since its inception, which also extends to cybersecurity. The company has strategically tackled evolving security challenges, particularly cybersecurity and data protection, through a multifaceted approach. The company prioritises proactive tech adoption and advancement to acclimatise to these challenges. We conduct regular security audits to identify vulnerabilities and provide comprehensive training to employees on cybersecurity best practices.

Encryption of sensitive data and regular updates of systems and applications form another crucial aspect of our strategy. Moreover, we employ various network security measures such as firewalls and intrusion detection systems. Separately, we have also collaborated with cybersecurity experts to stay abreast of the latest security trends and threats. By implementing these strategies, we ensure fair and unbiased lending practices while eliminating human bias, thus fostering trust and reliability in our operations.

Given the significance of debt in the financial sector, could you elaborate on the risk management strategies employed by you to navigate potential challenges and uncertainties associated with debt, ensuring sustainable and prudent financial practices?

Godrej Capital employs a comprehensive array of risk management strategies to navigate the complexities associated with debt, ensuring sustainable and prudent financial practices. One key aspect of our approach lies in the adoption of digital capabilities, which have revolutionised our customer information processing system, leading to streamlined onboarding processes, faster turnaround times, and an overall enhanced customer experience. Furthermore, our agile decision engine facilitates quick policy changes, allowing us to adapt swiftly to changing risk landscapes and introduce tailormade products catering to diverse risk profiles.

Moreover, we have implemented a unified credit underwriting system that integrates data from various sources, including alternative data, to create a holistic view of the borrower’s financial health. This platform conducts thorough due diligence, incorporating KYC checks, industry verifications, and income scrutiny. Leveraging technologies like Robotic Process Automation (RPA) alongside AI/ML further enhances our efficiency by automating repetitive tasks and streamlining workflows. The cost savings accrued from RPA are reinvested in technology enhancements and bolstering customer service.

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Additionally, we have established a zerotouch reporting environment, providing realtime insights into risk metrics and performance indicators. By ensuring our efficient data warehousing capabilities through early adoption of relevant software, we enhance our costeffectiveness while enabling swift analysis and decision-making. Despite rapid expansion geographically and product-offerings-wise, Godrej Capital has maintained a healthy portfolio, thanks to the synergy of these risk management strategies. This holistic approach underscores our commitment to prudent financial practices, ensuring the sustained success and resilience of Godrej Capital in the dynamic landscape of the financial sector.

With a focus on market trends, how do you stay ahead in identifying and mitigating risks, especially in the context of rapid market changes and emerging trends? Can you provide examples of successful risk management strategies in response to market dynamics?

Amid rapid market changes, it’s important to have an approach that involves continuous assessment and analysis of market trends, economic indicators, and regulatory changes.

Another key strategy is diversification across sectors and geographies to reduce the impact of market fluctuations. Godrej Capital has emphasised strong governance and oversight, aided by advanced analytics and Machine Learning technology. Collaboration with industry peers and regular employee training has further enhanced the understanding of market risks and best practices in risk management. Through its adaptability and flexibility, the company effectively continues to mitigate risks, ensuring long-term sustainability and growth.

Data security is paramount in today’s digital age. How does Godrej Capital Limited ensure robust data security measures, and what role does the Chief Risk Officer play in overseeing and enhancing these practices?

With the widespread use of digital technologies and the increasing amount of sensitive information being stored and transmitted online, protecting data from unauthorised access, disclosure, alteration, and destruction, is imperative. This is crucial for maintaining trust with customers, complying with regulatory requirements, and safeguarding against financial losses and reputational damage. For instance, Godrej Capital encrypts sensitive data both in transit and at rest to prevent unauthorised access. It also implements strict access controls to ensure that only authorised personnel have access to sensitive data. Moreover, the company conducts regular security audits and assessments to identify and address potential vulnerabilities.

Along with this, Godrej Capital exercises the practice of data minimisation, collecting and storing only the necessary amount of data needed for business purposes to reduce the risk of exposure. The company also provides regular training to employees on data security best practices to prevent data breaches. Additionally, we follow secure software development practices to ensure that applications are designed with security in mind

In my role as Chief Risk Officer (CRO), I oversee the effective implementation and improvement of these practices. I also ensure that my team’s skills are strategically segmented into critical areas that directly impact risk, including credit, collections, data analysis, and automation. This structure enables comprehensive risk evaluations and helps lower the overall delinquency rate.

Vendors are integral to business operations but pose potential risks. Could you elaborate on your approach to managing vendor-related risks, ensuring a resilient and secure supply chain, and the role of risk management in fostering effective vendor relationships?

Vendors play a crucial role in any NBFC and pose potential risks. Godrej Capital adopts a thorough approach to managing vendor-related risks throughout the vendor lifecycle. When selecting vendors, the company conducts extensive due diligence, assessing factors such as financial stability, reputation, and compliance with regulatory requirements. Clear contractual agreements are established, outlining expectations and responsibilities related to security measures, data protection, and risk management. We also continuously monitor vendors’ performance and compliance by conducting regular assessments and audits. Vendors are required to implement appropriate security measures to protect the data and systems, and the team works collaboratively to develop and maintain business continuity and disaster recovery plans. These are some of the many ways Godrej Capital ensures a resilient and secure supply chain, safeguarding operations and reputation in today’s business landscape.

Also Read | The importance of identity security for financial institutions

Looking ahead, what are the key future endeavours that Godrej Capital is considering in the realm of risk management, and how do these align with the broader industry trends and regulatory landscape?

Looking ahead, Godrej Capital is focused on several key endeavours in the realm of risk management, aligning with broader industry trends and the regulatory landscape. One such plan is to invest in strengthening the risk management infrastructure by leveraging AI and ML technologies, particularly implementing ML algorithms for predictive risk modelling. Additionally, the aim is to utilise India Stack technologies such as Account Aggregator systems for secure and quick customer onboarding, minimising fraud risks. Enhanced utilisation of alternate data sources and Gen AI for risk assessments is also on the agenda.

The aim is to build a comprehensive portfolio monitoring framework with enhanced early warning systems (EWS), enabling more proactive risk mitigation. These initiatives signify Godrej Capital’s commitment to staying at the forefront of risk management practices, ensuring continued success and resilience going forward.

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