Page 83 - Crisil Annual Report 2023

Statutory Reports
large clients, CRISIL has actively widened its client base and diversified the industry segments that it serves.
2. Foreign Exchange Risk
CRISIL earns a significant amount of revenue in foreign currency. Hence, rupee appreciation or depreciation may have a material impact on revenue and profitability. The Company follows a well-defined foreign exchange management policy and process, designed to minimise the impact of volatility in foreign exchange fluctuations on earnings.
The Company evaluates exchange rate exposure arising from global business and operations, and enters into foreign exchange hedging contracts to mitigate exchange rate risk. CRISIL’s foreign exchange management programme covers a large portion of projected future revenue over a 12-month period, and is restricted to standard forward contracts and options. Appropriate internal controls are in place for monitoring the use of these instruments.
3. Technological Disruption Risk – Generative Artificial Intelligence (Generative AI)
The present era is one of unprecedented technological development. The emergence of large language models (LLMs), in particular, brings several knowledge work categories, presently manual in nature, potentially within the scope of generative artificial intelligence (Al). We are assessing the potential for LLM adoption in our various business segments.
As of now, given the intellectual property-driven nature of our flagship businesses, and the relatively slow pace of adoption amongst clients, we believe the effects over the medium term will be gradual. This allows us to implement mitigants where feasible, and explore new business opportunities that LLMs can create. As part of our LLM strategy, we have also identified potential areas for evaluation.
The space is dynamic and evolving, and we are monitoring developments.
4. People Risk
As a knowledge organisation, key people-related risks for CRISIL include higher-than-optimal attrition, mismatches in the talent pipeline and a lack of ready candidates for internal succession.
Talent acquisition and development: We have stepped up our hiring programmes through a mix of hiring talent from campuses, infusing lateral talent from the wider market and fostering internal mobility. We offer
ample opportunities to employees for skill-building and reskilling to ensure a future-ready talent pool that can serve the evolving needs of customers. Leadership talent is nurtured through our focused development programme for future leaders, which grooms successors for critical roles within the organisation, ensuring our investment in our key talent yields an ongoing long- term return.
Talent retention: CRISIL is known for its safe and inclusive working environment, where employees from different backgrounds, and with varied skillsets, feel motivated and valued. Our Diversity, Equity, and Inclusion (DEI) philosophy has established a vibrant workplace that enriches employee experience. We benchmark our compensation on an ongoing basis to ensure our employees are fairly paid, in line with market trends. We rigorously measure employee engagement, and act upon opportunities to enhance it. These measures have helped contain employee attrition in a highly dynamic market.
Employee welfare: Our holistic approach to employee well-being balances physical, emotional and financial aspects. Our wellness policies and benefits are continuously benchmarked with market best practices. CRISIL follows responsible business practices, protects human rights and has high standards of corporate governance to give employees a work environment in which they can grow and thrive.
5. Legal, Regulatory, and Policy Risks
CRISIL operates in a number of geographies and policy jurisdictions. Any failure to comply with the applicable policies, laws, and regulations could adversely impact growth and profitability, and increase exposure to civil and/or criminal actions. This could lead to damages, fines and regulatory sanctions against CRISIL, with possible consequences for corporate reputation. Consequently, we have robust mechanisms in place to maximise compliance.
Compliance: CRISIL is committed to complying with the laws and regulations of the countries in which it operates. The relevant business teams set detailed standards and ensure all employees are aware of and comply with the relevant regulations and laws. Our Legal and Compliance teams monitor and review our practices to provide reasonable assurance that we remain aware of and are in line with all relevant laws and legal obligations.
Tax: Our tax principles provide overarching governance in tax matters, and our experts set out controls to assess and monitor tax risk for direct and indirect taxes. We
Annual Report 2023
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