“Identification of risks and controls is of utmost importance in any process before it is implemented,” says Shalinee Mimani, the Chief Risk Officer at Godrej Housing Finance.
A chartered accountant with over twenty years with retail risk specialisation in underwriting, policy and portfolio management, Shalinee’s career spans MNCs such as Bank of America, ABN Amro Bank & Barclays, along with private sector banks such as HDFC Bank and DCB, and NBFCs like Fullerton India, and now with Godrej Housing Finance. In her career, she has played key roles in launching and implementing risk management in the retail sector.
While the post-pandemic chaos has resulted in innovations and accelerated digital transformations, the associated risks are also a cause of concern. The organisations continue to grapple with the unprecedented changes brought about by the constant lockdowns and interruptions in economic activities. In this light, Analytics India Magazine spoke to Shalinee in order to understand the evolving role of chief risk officers and risk management in the post-COVID world and the risk and controls in Godrej Housing Finance to ensure a smooth process and functioning.
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Prospering in the Pandemic
Talking about the company and its establishment during the pandemic, Shalinee said, “As a new entrant, our focus has always been on a digital-first approach to enable homeownership, and since we launched our business during the pandemic, use of digital technology was a ‘must-have’ and not a ‘good-to-have’ option for us.”
Godrej Housing Finance spent considerable time evaluating all the technology solutions available in the market to give a minimal or contactless experience to their potential customers. The company convened interdisciplinary teams with sufficient diversity to brainstorm and design the automated workflows followed by a robust execution strategy. “We continue to remain focused on analysing the evolving consumer needs and related behaviour patterns as we look to build a long-term sustainable home financing business,” added Shalinee.
The company firmly positioned itself in the market with Video KYC and automated fraud detection in various stages of the data analytics and customer journey processes — from quality control of data to identifying incorrect data during the data capture process.
“All of these are needed to eventually translate into quicker turnaround times, lower costs and sharper insights for clients,” said Shalinee. “We are looking for holistic solutions to incorporate any eventualities that may occur.”
“One of the biggest challenges the company has faced was to develop solutions with very limited or no data. To address that, we are following an agile approach enabling a technological and cultural change that drives enhanced collaboration and automation,” said Shalinee. “We are also investing in data structures, with sufficient layers of protection for building a successful analytics organisation enabling reduced time to insights and making decisions,” Shalinee continued.
“Furthermore, as a startup, our challenges did not pertain only to digital transformation but rather around enhancement and integration with related leverage technology that could provide in business functions like, onboarding employees virtually, training them for a seamless adoption of digital solutions, enabling work from home and improving consumer experience without compromising on portfolio quality and safety of our employees,” added Shalinee.
Risk Management in Action
As a digital-first organisation, the culture at Godrej Housing Finance is envisioned with their customers at the core. “At GHF, we encourage people who come with new and diverse ideas and welcome those who are quick learners and share our values.”
The company truly believes that there is a great talent pool available in the market, with aspiring young data analysts, scientists, and engineers willing to embrace technological changes and hence have a considerable role in the company’s growth journey. “We believe in giving opportunities to people who want to grow with us. We are investing in building a best-in-class analytics and technology team as we believe this is a great recipe for building a lending organisation that uses data analytics for making decisions,” said Shalinee.
Additionally, credit risk monitoring and management is part and parcel of any lending industry; however, COVID-19 has posed various challenges, which has forced every industry to realign the risk management practices and make themselves more resilient and be future-ready.
Shalinee believes there is now an urgency to ensure that risk management programs to be optimised by data, metrics, and technology. Thus, Godrej Housing Finance is critically investing in creating platforms to store, manage, and operationalise all aspects of the program, from risk identification, physical security or cyber resilience to operational response, recovery under crisis management and business continuity. “Risk Management at the enterprise level is our focus. We are investing in creating robust metrics, real-time dashboards,” she said. “In a post-COVID world, the requirement to better understand current events and how they impact our business will play a critical role in assessing risks — as well as opportunity. We are using technology to automate controls and assurance framework.”
One needs to consider the critical risk areas: strategy, technology, operations, third-party access to data, regulatory, forensics, cyber resilience, data leakage, and privacy in any digital ecosystem. “Managing risks by putting control measures based on applicable risks in the changing era is critical to an organisation’s sustainability. Therefore, laying out the building blocks of the digital risk strategy is crucial to its success,” added Shalinee.
She further explained that an important aspect in defining the controls is considering the nature and level of digitisation in the operations, as most of these aspects are nascent and tightly connected with systems or manual processes. For instance, while customer profiling is important for better customer offerings and experience using digital and analytical solutions, protecting customer data privacy is equally critical.
The Need for Risk Management in the Post-COVID World
Talking about the changing scenarios, Shalinee believes that the role of a chief risk officer in the post-pandemic environment has assumed multifold significance with the addition of data security and cyber risks. “It has become imperative to realign the erstwhile risk management practices to the new realities of the post-COVID-19 world to make an organisation robust and resilient in the new normal,” added Shalinee.
It is believed that the role of risk management is expected to increasingly become that of a business advisor rather than merely a control function. As a result, proactive recalibration of credit rating models to incorporate new risk profiles of impacted businesses, real-time portfolio monitoring, enhanced agility in taking corrective actions proactively, and stress testing of portfolios under various scenarios have become extremely relevant. Further, implementing a robust liquidity management framework by ensuring and putting in place a robust funding plan in case of unforeseen shortfalls has assumed great importance.
“A complete revamp of capabilities in managing cyber risks, technology risks, human capital risks, as well as organisational reputational risk besides business continuity management has also become a key, given the uncertainties in the operating environment,” said Shalinee. “Crisis management is the new normal of risk management to combat the ‘black swan’ events as the financing business shifts away from traditional concepts. Data and real-time information-driven analytics are set to be the driving pillars of the new operating model, and the sooner the risk management practices are realigned, the higher will be the resilience capacity of any organisation.”
Godrej Housing Finance is currently using machine learning-based fraud detecting solutions by partnering with Bureaus. The company also has plans to leverage machine learning for launching other products in its retail finance portfolio. In addition, the firm is constantly looking at automating its processes to improve its team’s productivity. Case in points — RPA, robotic process automation, is one such tool that GHF uses effectively to automate its repetitive tasks, ensure process accuracy and reduce operational risks.
However, this wasn’t always the case. One of the biggest challenges GHF faced was developing analytical models with very limited or no data. Shalinee explained that the company is following an agile approach enabling a technological and cultural change that drives enhanced collaboration and automation. “We are investing in data structures, with sufficient layers of protection for building a successful analytics organisation enabling reduced time to insights and decisions,” said Shalinee. “We are also building a culture where all decisions are backed by data. Currently, the absence of internal data is a challenge. However, we are leveraging data from various external sources for driving decisions.”
Data breaches and cyber security risks, along with vendor risk and climate risks, are some of the new emerging threats that are gaining a lot of attention in the post-pandemic era. To withstand, GHF is critically focusing on risk prioritisation and a mitigation plan at an enterprise level. Therefore, frequent testing and monitoring of these risks and the existing risks has become a critical aspect of risk management. “We are striving to create a risk management culture at Godrej Housing Finance,” concluded Shalinee.