There is an increasing perception in the security circles that the Pak nuclear arsenal is in unsafe hands and could be misused by the fanatical jehadis with suicidal tendencies... In such a scenario how should India react?

Well, what can I say here, Ivor himself is from Pakistan and from his words you can see that he is impartial. On the other hand, I would like to add that from the condition and Image of Pakistan is drawn on people of world, then its obvious to have such questions.
Before going anything deeper.. I request that do not make it a debate of regionalism or this topic may get locked or deleted as per eTI rules.
So, such questions are obvious but its good to see that how interestingly Mr. Ivor answered it. Well, there is no doubt that having Nuclear weapon with Pakistan is just to show that they are powerful enough, I disagree  the point that they are only meant for Israel but they are there to defend themselves.  Anyhow, be it India or Pakistan, working on nuclear destruction weapons is only wastage of resources. Lets not forget that we are so small as compared to USA and Russia those accounts for more than 80% of world's nuclear warheads.

Better use the nuclear power for humanitarian purposes. As far as Pakistan is concerned, definitely Pakistan really needs to work upon its image worldwide, it was once read in newspaper that Pakistan has been declared as nation who support terrorism. I hope new political powers in Pakistan will look into this matter and will try to establish Pakistan as a peaceful nation.