Indian SMEs are scaling faster than their risk strategies

This article is authored by Aby Abraham, founder & executive director, PromptTech Global.

Over the past two and a half decades, India's insurance industry has undergone a remarkable transformation. When the sector opened to private participation, the priority was expanding social security — life and health insurance — across a large, diverse population, and that worked: Penetration grew considerably. But whether enterprise insurance also received the same attention is something we need to think about.

SME

During this same period, India itself transformed. Economic growth, digitalisation, access to capital and a thriving startup ecosystem have encouraged a new generation of entrepreneurs to build, innovate and expand. But as we celebrate this, one question deserves equal attention: Are risk-mitigation and insurance strategies scaling at the same pace as their growth?

Growth is important. longevity is equally important. For founders, immediate priorities are the product, customers, revenue, people and growth. But building a successful enterprise is not only about how quickly a business scales. It is also about how long it can sustain that growth and continue creating value.

This is where risk mitigation becomes fundamental. A well-designed risk strategy helps identify threats, reduce their impact, transfer appropriate financial risks through insurance and recover after unexpected events.

A company can spend years building its reputation, customers, technology, people and intellectual property. Yet a single significant event—a cyberattack, catastrophe, liability or business interruption—can put that value at risk.

Insurance is a financial protection strategy. For growing enterprises, insurance is a tool within a broader risk strategy. Businesses first need to understand which risks can be controlled internally and which could threaten operations before evaluating those exposures for insurance protection.

Insurance can transfer significant financial risk away from the enterprise, helping it recover more easily from catastrophic or unexpected incidents — making it central to sustainable growth.

When businesses scale faster than their protection. Throughout my career in insurance, I have seen businesses scale faster than their risk-management and insurance frameworks. Yet their approach to insurance sometimes remains unchanged.

Consider a company that began with 20 employees and one office. Years later, it may have hundreds of employees, multiple locations, international customers and significant technology infrastructure.

Its risk profile has fundamentally changed. Its insurance programme should have changed with it. Insurance protection cannot remain static while an enterprise evolves. Otherwise, businesses may rely on assumptions rather than a structured plan for when something happens.

Risk strategy must evolve alongside growth strategy. Most growing businesses review revenue, costs, hiring and expansion. Risk and insurance deserve the same discipline. Management should ask: What has changed? What new risks have emerged? Where are our protection gaps? What can we retain, and what should we transfer? Could the business keep operating if a significant event happened tomorrow?

Without this discipline, businesses can end up relying on luck instead of a proper strategy. Strategy — backed by periodic review — should be what moves a business forward, not chance. This becomes even more important when the business itself is changing rapidly: New technology & new ways of working can introduce exposures that didn't exist when the original risk strategy was created.

Every new opportunity can introduce a new risk. Artificial Intelligence (AI) is becoming so popular recently that many enterprises are adapting it into their operations, including customer care and other functionalities for better efficiency. While it does offer quick turnaround, it also creates another set of liabilities such as privacy issues, intellectual-property disputes and more, which most organisations are still learning to address.

AI is only one example. Cybersecurity, cloud infrastructure and complex supply chains are also changing the risk profile of modern enterprises. This is why risk strategy cannot be separated from business strategy. As businesses adopt new technologies and capabilities, their risk frameworks need to evolve with them.

From growth to resilience to longevity. Technology is changing how insurance is bought and managed, and protection strategies are evolving alongside it. India's insurance sector has also moved towards allowing 100% FDI, attracting more capital and, with it, more innovation in products and technology. That makes it easier for enterprises to plan risk strategy around the technology.

What's needed now is a strategic shift: Helping every enterprise in India mitigate risk while building longevity — one integrated move, not two separate conversations. One of the biggest opportunities here is enterprise protection for Small and Medium Enterprises (SME) — not simply selling more policies, but helping entrepreneurs manage the risks to the value they're creating.

India must protect what it is building. India has created tremendous momentum around entrepreneurship. Alongside building, we must develop a stronger culture of protecting what we build. Entrepreneurs should not have to discover the importance of risk management only after experiencing a significant loss. Risk strategy should evolve alongside growth strategy from the beginning.

India’s SMEs are scaling faster than ever. Now their risk and insurance strategies need to scale with them.

(The views expressed are personal)

This article is authored by Aby Abraham, founder & executive director, PromptTech Global.