Enterprise Risk Management Evaluation

Did you know that enterprise risk management (ERM) is expected to grow globally to $6.59 billion in 2028 at a compound annual growth rate of 6.5%?*

Rising regulatory compliance needs, increasing awareness on cybersecurity attacks and emerging technologies shaping business operations while addressing ESG changes make ERM an inevitable necessity for organizations. ERM helps businesses identify, evaluate and prepare for potential hazards that can impede business operations and cause financial losses.

Particularly in UAE’s dynamic business environment where adhering to compliance mandates is critical to avoid penalties and ensure hassle-free operations, MBG helps organizations across industries and scales with ERM. We help organizations assess current risk areas, develop a practical roadmap for risk mitigation, embed risk control tools, build awareness and help with better informed decision making

Let's explore why ERM evaluation matters and what it means for businesses operating in this region.

ERM in the UAE: Regulatory Landscape

While ERM is not universally mandatory for all organizations in the UAE, there are sector-specific requirements and strong recommendations that businesses should be aware of:

1. Financial Sector: The UAE Central Bank requires banks and financial institutions to implement robust risk management frameworks. The Central Bank's "Corporate Governance Regulation" emphasizes the importance of ERM and mandates its implementation for licensed financial institutions.
2. Insurance Sector: The Insurance Authority of the UAE has issued regulations requiring insurance companies to establish effective risk management systems as part of their governance framework.
3. Listed Companies: The Securities and Commodities Authority (SCA) strongly recommends that publicly listed companies implement ERM as part of good corporate governance practices.
4. Government-Linked Entities: Many government-owned or partially-owned entities in the UAE are required to implement ERM as part of their governance structures.
5. Private Sector: While not strictly mandatory for all private companies, ERM is increasingly seen as a best practice and a competitive advantage in the UAE business landscape.

Why ERM Evaluation Matters?

Given this regulatory context, ERM evaluation becomes crucial for several reasons:

1. Compliance Assurance: For regulated entities, regular ERM evaluation ensures ongoing compliance with regulatory requirements.
2. Investor Confidence: In a region attracting significant foreign investment, a well-evaluated ERM program can boost investor confidence.
3. Economic Diversification: As the continues to diversify its economy, businesses face new risks. ERM evaluation helps ensure they're prepared for these challenges.
4. Reputation Management: In the tightly-knit business community, a strong risk management reputation can be a significant asset.

Key Components of ERM Evaluation

When we conduct ERM evaluations, we focus on several critical areas:

1. Alignment with UAE Regulations: We ensure that your ERM framework aligns with relevant UAE regulations and guidelines.
2. Cultural Sensitivity: We assess how well your ERM practices account for the unique cultural and business environment.
3. Emerging Risk Identification: Given the rapid pace of change in the economy, we evaluate your ability to identify and respond to emerging risks.
4. Stakeholder Engagement: We examine how effectively you engage with diverse stakeholders, including government entities, in your risk management processes.
5. Technology Integration: We assess your use of technology in ERM, considering the UAE's push towards digital transformation.

Common Challenges in ERM Evaluation

Through our work with various organizations, we've identified several common challenges:

1. Regulatory Interpretation: Many organizations struggle to interpret and apply evolving ERM-related regulations.
2. Data Quality: In a region where data practices are still maturing, ensuring high-quality risk data can be challenging.
3. Cross-Border Risks: For businesses operating across the GCC, managing cross-border risks adds complexity to ERM.
4. Talent Gap: Finding skilled risk management professionals in the market can be difficult.

The MBG Approach to ERM Evaluation in the UAE

At MBG, we've developed a UAE-specific ERM evaluation framework that addresses these challenges:

1. Regulatory Expertise: Our team stays up-to-date with UAE and GCC regulations to ensure your ERM program is compliant.
2. Customized Assessment: We tailor our evaluation to your specific industry and regulatory context within the UAE.
3. Benchmarking: We compare your ERM practices against both global standards and best practices.
4. Actionable Recommendations: We provide practical, culturally-appropriate recommendations for enhancement.

Real-World Impact

Recently, we worked with a UAE-based conglomerate to evaluate their ERM program. Our assessment revealed gaps in their emerging risk identification process, particularly related to technological disruption. By implementing our recommendations, including the establishment of a dedicated emerging risk team and improved scenario planning, the company was able to navigate a period of significant digital transformation more effectively.

The Path Forward

In the rapidly evolving business landscape, a well-evaluated ERM program is not just a compliance tool—it's a strategic asset. It provides the foundation for resilient, agile organizations capable of thriving in this dynamic market.

At MBG, we're committed to helping organizations unlock the full value of their ERM efforts through rigorous, insightful evaluation. Whether you're a regulated entity ensuring compliance or a private company looking to enhance your risk management practices, we're here to guide you every step of the way.

Don't let uncertainty hold your business back in the market. Contact MBG today to discover how our UAE-focused ERM evaluation services can help you build a more resilient, risk-aware organization.

Sources:

* https://www.researchandmarkets.com/report/enterprise-risk-management?utm_source=GNE&utm_medium=PressRelease&utm_code=63w5kj&utm_campaign=1869380+-+Global+Enterprise+Risk+Management+Market+to+Reach+%246.38+Billion+by+2027%2c+Driven+by+Increasing+Data+Security+Breaches+and+Strategic+Partnerships&utm_exec=jamu273prd