Al-Jasser: work is underway to restructure and develop aviation infrastructure    Diriyah to host third IMFC Deputies meeting under Saudi chairmanship    15,135 decisions taken to penalize Saudis and expats for violations    Saudi-European Parliamentary Friendship Committee discusses cooperation during Strasbourg visit    Saudi stock market loses half a trillion riyals, with Aramco's losses amounting to SR340 billion Tariff turmoil rattles Gulf markets    KAU to host Digital Communication Conference in Jeddah from April 29 to May 1    TGA: Riyadh tops with 45% of 290 million orders delivered in 2024    Aja and Salma mountains draw nature lovers to Hail's rugged landscapes    US revokes all visas for South Sudanese nationals over deportation dispute    Death toll from Myanmar earthquake rises to 3,471    Macron to hold Gaza summit with Egypt and Jordan in Cairo    Benzema rescues Al Ittihad with stoppage-time equalizer in thrilling Jeddah Derby    Al Qadsiah and Al Ettifaq share spoils in tense Eastern Derby stalemate    Moussa Diaby praises Al Ittihad's resilience after Jeddah Derby draw "When you can't win, you take a point"    Saudi assistant referee Iman Al Madani joins AFC elite list for 2025    Riyadh Art Week launches with over 50 galleries showcasing global artistic dialogue    Turki Al-Sheikh announces five new Saudi film projects to be produced in Riyadh    Saudi Ministry of Education to showcase innovations at 2025 Geneva International Exhibition    Ed Sheeran weaves Persian music into new song, Azizam    Veteran Bollywood actor Manoj Kumar dies at 87    Screen time in bed linked to insomnia, study finds    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    King Salman prays for peace and stability for Palestinians in Ramadan message King reaffirms Saudi Arabia's commitment to serving the Two Holy Mosques and pilgrims    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Risk management: Driver of enterprise value in emerging environment
Published in The Saudi Gazette on 07 - 06 - 2011

JEDDAH: Poor risk management practices at major companies, especially financial institutions, have often been cited as a key contributor to the global economic crisis, a survey by KPMG titled "Risk Management - A Driver of Enterprise Value in Emerging Environment' across Europe, Middle East, Africa and India" said.
Organizations were not completely successful in aligning risk perceptions and appetite of key stakeholders with that of individual decision makers, resulting in suboptimal business decisions being made," said Tareq Al Sadhan – partner and chief operating officer, KPMG in Saudi Arabia – commenting on the deficiencies in risk management that led to the crisis.
Over the past 18 months, there have been a number of regulatory developments in the area of risk management with a focus to strengthening risk oversight processes at the Board level across several countries.
But regulation in some ways is part of the problem itself. Ashley Smith, KPMG head of Internal Audit, Risk and Compliances Services, Europe, Middle East and Africa (EMA) concurred, "The key to effective risk management lies in untangling it from regulations and making it more useful to today's business leaders as a strategic tool for effective decision making."
The survey pointed out that risks have increased and become more complex, managing it have become imperative. Overall, post the global crisis, there is a consensus that anticipating and managing risks proactively is going to deliver tremendous long-term value to organizations. Establishing a global footprint, cross border regulations, geo-political events and increased complexity in the value chain are leading to more risks.
Expectation on risk officers has also increased. In the context of making risk management a strategic tool, CEOs expect their risk officers to be more market and strategy oriented than be focused on the operations and processes. Risk officers who are able to transcend to a strategic role will deliver the greatest value to their organizations. While organizations are making progress in implementing risk management processes and structures, the biggest challenge is around integrating risk with strategy and the business.
"There is a need to de-mystify risk and make it simpler for business managers to grasp and implement. A firm commitment at the top and training in the use of risk management tools and approaches is essential to overcome this hurdle. Otherwise, the benefits of risk management will continue to be fuzzy", as highlighted by Khalid Yasin, Head Risk and Compliance Services, KPMG in Saudi Arabia.
Moreover, perceptions on the role and responsibilities of Boards as watchdogs have become onerous – that of linking strategy, risks, rewards and executive compensation to ensure that there are no misalignments. How much risks are organizations taking on and are they taking the right risks are some of the key questions that Boards need to answer. Boards have the role of balancing majority and minority views and this is where their job becomes even more difficult. Risk oversight challenges faced by independent directors include their limited exposure of their Company's strategy and inadequate information architecture about the business, industry and external factors.
Current risk management practices also indicated separation between risks and strategies.
"Appointing a CRO is only part of the solution. Companies need to integrate risk management into day-to-day decision making and this requires (a) a holistic approach to risk management (b) forward looking risk information and (c) a strong risk culture" Altaf Dossa, head of Forensics practice of KPMG Saudi Arabia pointed out.
In order to overcome these challenges and leverage risk management as a driver of enterprise value, the survey suggested five key imperatives for companies, namely:
l Enhancing effectiveness of board oversight of risks by separating risk process and content - Companies need to get specialists to help the Board navigate through the strategy and improve their understanding of key risks. It is also important to bring in diversity and align the board composition to key business and strategic priorities.
l Integrating risk management into decision making by leveraging Key Risk Indicators (KRIs) - Key trends that can be predicted with the help of risk management tools could help organizations have a better grip on what is around the corner.
l Focusing on softer aspects: Companies need to focus on risk leadership, risk perception and behavior, and communication.
l Positioning the Chief Risk Officer as a strategic business adviser – A CRO should be someone who can independently validate the strategy with the help of a robust information architecture.
l Integrating the company's risk management efforts at an enterprise-level Companies need to marry the top down and bottoms up views on risks.


Clic here to read the story from its source.