Crisis consultants in demand as regulatory run-ins rise

A person from a Big 4 consulting firm, who requested not to be named, said the firm is looking to have close to 2,000 people in its crisis team, more than double the current strength.

Experts said that the time to resolve a crisis has shrunk from three-four weeks to a few days currently, as teams have access to AI and data solution methods for quick resolution.

“Crisis advisory is a crucial segment at GT Bharat, and we see significant potential in it," said Narendra Ganpule, partner and financial services consulting leader at Delhi-headquartered consulting firm Grant Thornton Bharat.

He added that the firm has a team comprising professionals from different verticals of the firm that guides clients on recovering from crises and on addressing identified gaps.

Grant Thornton Bharat was brought in by Kotak Mahindra Bank to plug gaps in its IT systems, months after the Reserve Bank of India (RBI) barred it from onboarding new customers through its website and mobile app. RBI had said in May that it will review the curbs following an external audit.

Under governor Shaktikanta Das, RBI has taken a tough stance against non-compliance, taking on some of the biggest names in the financial services space.

Also read: Lead auditors to face the heat for group lapses. Small audit firms are fretting.

Apart from Kotak Mahindra Bank, founded by billionaire banker Uday Kotak, the regulator also cracked the whip on India’s largest private sector lender HDFC Bank in December 2020 and consumer durables major Bajaj Finance in November 2023. RBI eventually lifted the restrictions on both.

According to a person aware of the discussions, several fintech companies, including a prominent one, have sought advice from crisis consultants to navigate regulatory challenges.

Change in view

Experts said that the way companies saw crisis consulting has changed over the years. According to Anshul Prakash, partner, Khaitan & Co, crisis management earlier used to be reactive but has now become increasingly pre-emptive. The focus, Prakash said, is on preparedness of internal function teams to undergo orientation and training by external specialists.

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“An instance of a dawn raid by authorities on the premises caught the personnel on-ground unaware on the way forward, leading to contradictory statements in their communications. One needs to prevent these issues and nodal officers from within the organisation have to be prepared in advance of any eventuality," said Prakash.

To be sure, crisis advisory is not limited to run-ins with the regulator and also includes cyber attacks and climate events. At EY, the team comprises regulatory experts, accountants, lawyers, forensic specialists and those who are well versed in corporate affairs.

“Some of the main issues triggering crisis scenarios for organizations today revolve around ransomware attacks during which the teams have to look into how the firms are blackmailed, data at risk and find a response," said Arpinder Singh, global markets and India leader, EY Forensics & Integrity Services.

Increased regulatory checks is the other ‘crisis’, and companies must ensure that teams are well versed with compliance laws, which is especially crucial now that many firms are going global, Singh added.

Pointing out that mature organisations are generally aware of the implications of a crisis and invest in crisis prevention, Puneet Garkhel, partner - risk consulting and leader - forensic services, PwC India, said, “MSMEs (micro, small and medium enterprises) and start-ups, on the other hand, prioritise growth in the initial years, and investments are more towards crisis management than crisis prevention."

PwC's crisis management team in India is part of PwC's Global Centre for Crisis and Resilience, and it is set to increase by 30% in terms of manpower additions this fiscal year across risk consulting.

Read more: Need to balance fintech innovation with prudence: RBI