India’s Audit Panels Face New Mandate as Cyber, AI Risks Surge
As regulatory scrutiny tightens and business operations become increasingly digitised, boards must recognise that the audit committee has become central to the overall viability of the modern corporation.
The Gist
- Traditionally compliance-focused, they now combat cybersecurity threats and AI risks.
- Experts stress the need for high-quality reporting and informed discussions within committees.
- Regulatory scrutiny and digital operations necessitate a shift in their role for corporate viability.
India’s corporate audit committees are facing a fundamental shift in their mandate, moving beyond their traditional role as compliance watchdogs to become the primary line of defence against cybersecurity threats, artificial intelligence risks, and geopolitical instability.
That was the consensus among a gathering of the country’s top regulators, bankers, and governance experts at the inaugural Free Press Journal (FPJ) Round Table on the Effectiveness of Audit Committees, hosted in collaboration with corporate governance advisory firm Excellence Enablers.
As regulatory scrutiny tightens and business operations become increasingly digitised, speakers at the event warned that boards must recognise that the audit committee has become central to the overall viability of the modern corporation.
Beyond the Checklist
M Damodaran, the former Chairman of the Securities and Exchange Board of India (SEBI) and Chairperson of Excellence Enablers, set the tone for the discussion, emphasising that audit committees must transcend the routine of merely meeting legal requirements.
Damodaran called for high-quality financial reporting and "informed conversations" within these committees, noting that members must stay abreast of how rapidly governance expectations are evolving.
AI And Cyber Threats
The discussion highlighted that the risk landscape has expanded well beyond balance sheets. Sudhir Soni, a senior partner at audit firm BSR & Co. LLP, pointed to a growing list of "new age" liabilities, including cybersecurity breaches, insider threats, and geopolitical uncertainty.
Soni cited specific corporate episodes, such as those involving industrial gas giant Linde India and the crisis at Café Coffee Day, to illustrate the importance of rigorous financial reporting and internal approvals. He stressed that transparency and open lines of communication between committees and regulators are now essential.
Natarajan Ramkrishna, a veteran independent director, reinforced this view, identifying fraud and IT security as the dominant concerns in today’s audit landscape. He recommended that companies prioritise hiring specialised talent to bridge the knowledge gap and improve coordination between audit and risk committees, particularly regarding the unpredictable nature of AI-related risks.
Financial Sector And Minority Shareholders
The unique pressures facing financial institutions were addressed by Abhijit Sen, former CFO of Citi India. Sen highlighted the heightened responsibility of committee chairpersons and members in the financial sector, where risk oversight is closely tied to systemic stability and intense regulatory focus.
Governance in promoter-led firms also drew scrutiny. Sunil Mehta, a seasoned banker and independent director, reminded the audience of the committee's fiduciary duty to protect minority shareholders. In companies where promoter families hold significant sway, Mehta argued, audit committees must exercise a deep understanding of the risk environment to monitor decisions effectively.
Integrated Governance
Dinesh Khara, the former Chairman of the State Bank of India (SBI), concluded the session with a call for structural integration. Khara urged audit committees to stop working in silos, advocating instead for an "integrated governance framework." He noted that the effectiveness of any committee ultimately hinges on the quality and commitment of the individuals appointed to it.
The roundtable, which also included prominent industry figures such as Abizer Diwanji (Head of Financial Services, EY India), Ketan Dalal (MD, Katalyst Advisors), and Govindraj Ethiraj (Editor, The Core), concluded that audit committees must now be viewed as the corporation's first line of defence in maintaining stakeholder trust.
The high-powered discussion featured a distinguished lineup of leaders, including Abhishek Karnani (Director, FPJ), Ketan Vikamsey (Partner, KKC & Associates), Nagesh Pinge (Ethics & Governance Expert), Nikhil Bhatia (MD, Alba Capital), and Sudarshan Sen (Former Executive Director, RBI).
