Chief Financial Officers (CFOs) are raising alarm about a range of risks that could threaten business stability, with geopolitical uncertainties, cybersecurity threats, regulatory challenges, and economic volatility topping the list. In this unpredictable environment, CFOs are urging companies to adopt a proactive, agile approach to risk management that balances growth with caution.

Focusing on critical areas like talent development, cybersecurity, regulatory compliance, and technological innovation, CFOs stress the need for businesses to build resilience and adapt to the rapidly changing landscape. With comprehensive strategies, they believe organizations can not only navigate these challenges but also thrive amid uncertainty.

Here are the top risks for India Inc as per CFOs:

Geopolitical and Economic Uncertainty

CFOs are closely monitoring global economic conditions as geopolitical tensions loom large over business operations.

Pankaj Vasani, Group CFO of Cube Highways InvIT, emphasized the delicate balancing act required to navigate these turbulent times. “We must remain vigilant to global economic fluctuations and geopolitical developments,” he said.

Aneel Gambhir, CFO of DTDC, echoed the sentiment, noting the unpredictability of global conditions, particularly in currency markets: “Fluctuating global economic conditions are a concern, especially with the volatility we see in currency markets.”

Amit Jaiswal, CFO of Royal Orchid Hotels Ltd., pointed out the significance of staying attuned to international developments, including India’s evolving relationship with China: “The normalization of relations between India and China will be a critical factor to watch as we move into 2025.”

Amidst these challenges, CFOs are prioritizing strategies to mitigate the impacts of global slowdowns and trade tensions on India Inc.’s profitability.

Cybersecurity and Digital Risks

As digital adoption accelerates, cybersecurity has become a major concern for CFOs. With cyber threats like phishing, data breaches, and the rise of deepfakes, the risk to organizational security has never been greater.

Bittu Varghese, CFO of Table Space, highlighted the vulnerabilities posed by the growing adoption of electronic payments, which offer operational efficiency but also increase exposure to cyber risks: “As we adopt more digital payment methods, the risks associated with cyberattacks grow exponentially.”

Vinod Francis, CFO of South Indian Bank, and Bhagat Singh, CFO of Ceigall India Limited, stressed the importance of proactively addressing these threats, particularly in the era of rapid technological advancements like generative AI and automation. Francis cautioned, “With the increasing digital threats, it’s critical that businesses adopt robust cybersecurity frameworks.” Bhagat Singh added, “We need to address the rise of cyber threats head-on, as these have the potential to disrupt operations entirely.”

Regulatory and Compliance Challenges

The evolving regulatory environment poses another significant challenge for India Inc. According to the Horizon Watch Emerging Risk Report, 67% of businesses view data privacy and protection regulations as a top concern. Changes in Environmental, Social, and Governance (ESG) standards, taxation, and data privacy laws are expected to add further complexity for businesses.

Ramani Dathi, CFO of TeamLease Service, underscored the need for vigilance in the face of these shifting regulatory landscapes: “We must stay ahead of regulatory changes to avoid operational disruptions.”

Santosh Agarwal, CFO of Alphacorp, cautioned that monitoring both domestic policies and international developments, such as stricter immigration policies in the U.S., will be crucial for India’s IT sector and foreign currency earnings. “Global regulatory shifts will impact India Inc. significantly, particularly in sectors reliant on international operations,” he said.

Inflation and Cost Pressures

Inflation and rising input costs are significant risks facing businesses.

Rishabh Jain, CFO of Bikaji Foods International, highlighted the pressure on gross margins due to rising product costs and demand stagnation: “Inflation and rising input costs are squeezing margins, and we need agile financial planning to manage this pressure.”

Vinod Francis noted that fluctuations in interest rates could further increase borrowing costs, while Bhagat Singh warned that tariffs driving inflation could disrupt market stability: “Fluctuating interest rates and tariffs are adding an extra layer of uncertainty to an already volatile economic environment.”

Talent Acquisition and Retention

The issue of talent acquisition and retention remains critical, particularly in the finance and technology sectors. Bittu Varghese emphasized the importance of addressing capacity and capability gaps within organizations as businesses strive to execute digital transformation initiatives: “Addressing talent gaps is vital for successfully executing digital transformation, and this challenge will only intensify in 2025.”

Meanwhile, Rishabh Jain stressed the significance of building high-performing teams to drive growth in an increasingly complex environment: “Building motivated, high-performing teams is critical to navigating the challenges of 2025.”

CFOs Bhagat Singh and Venkatraman Narayanan, CFO of Happiest Minds, reiterated the need to prioritize talent development and retention as a key strategy for long-term growth: “Fostering talent is not just about filling gaps but about ensuring sustainable growth over the long term,” said Narayanan.

Technological Innovation and Disruption

The rapid pace of technological advancements presents both opportunities and risks for India Inc. While innovations like AI, automation, and digital transformation promise to drive growth and efficiency, they also pose challenges related to execution, cost, and security.

Bhagat Singh emphasized the importance of taking a balanced approach to investing in emerging technologies, ensuring strategic ROI without overinvesting in unproven trends: “While technological advancements like generative AI can revolutionize business, we need to adopt them carefully, with calculated investments and a clear strategy.”

Supply Chain Vulnerabilities

Supply chain disruptions, exacerbated by the pandemic and global trade tensions, continue to challenge businesses. With rising input costs and logistical hurdles, CFOs like Vinod Francis are concerned about vulnerabilities within global supply chains. “The disruptions we have seen in supply chains are likely to continue, and businesses must focus on building resilient and diversified supply chains,” he said.

Capital Market and Investment Risks

Rising geopolitical tensions and potential economic slowdowns could also affect capital markets. Bhagat Singh warned that global value chains are vulnerable, and CFOs must engage in scenario planning to navigate fluctuating interest rates and tariffs: “Capital markets are more volatile than ever, and CFOs must be prepared for unexpected disruptions.

Vinod Francis highlighted the challenge of capital market volatility, noting the difficulty of raising capital in uncertain economic conditions: “Raising capital in this environment is challenging, and companies must focus on strengthening their balance sheets to weather any storms.”