Shifting from Risk Management to a Culture of Risk and Resilience in Companies in the Middle East

Introduction

In the dynamic and ever-changing business landscape of the Middle East, companies are increasingly recognizing the importance of building risk and resilience management into their operations. This shift is not only driven by the region's ambitious expansion and development goals, but also by the valuable lessons learned from recent events, such as the COVID-19 pandemic. In this article, we will explore why companies in the Middle East should transition from a risk management culture to a culture of risk and resilience, and discuss the key elements involved in achieving this transformation.

The Need for a Culture of Risk and Resilience

Embracing new horizons

The Middle East region is driving economic opportunity by investing heavily in industrial sectors, infrastructure development, and technology, with the ultimate goal of diversifying economies and reducing its economic dependence on hydrocarbons. Risk and resilience management is a crucial component of this plan, as it enables countries within the region to navigate uncertainties and adapt to rapidly changing global economic conditions. By embracing a culture of risk and resilience, companies in the region can also align their strategies with the long-term goals of the region and position themselves for sustainable growth.

Learning from uncertainty

Key global crises, like the COVID-19 pandemic have highlighted the importance of resilience in the face of unexpected disruptions. Companies that had already embraced a culture of risk and resilience were better equipped to respond to the crisis, adapt their operations, and mitigate the impact on their business. This experience has reinforced the need for companies in the Middle East to shift their focus from traditional risk management to a more holistic approach that encompasses both risk mitigation and proactive resilience-building. With looming climate change and its impact on the evolving risk landscape, resilience and the ability to navigate uncertainties is vital for companies in the region.

Elements of Shifting to a Culture of Risk and Resilience

Having a plan for how your organization manages risk is crucial. However, the ability to be innovative through crises adds an advantageous layer to any operation. Calculating the impact of risks will not only inform recovery but also allows organizations to identify opportunities to thrive through adversity. Organizations can build resilience by aligning approaches to risk with their strategic goals and objectives.

There are several elements a company needs to take its risk management strategy to the next level and build resilience.

Leadership as champions

To successfully transition to a culture of risk and resilience, strong leadership is essential. Leaders must not only advocate for the importance of risk and resilience management but also demonstrate their commitment through actions. They should actively participate in risk discussions, allocate resources for resilience initiatives, and foster a culture that encourages innovation and continuous improvement.

Awareness and visibility

Building a culture of risk and resilience requires creating awareness and visibility throughout the organization. This can be achieved by incorporating risk and resilience discussions into various touchpoints within the company, such as team meetings, training sessions, and performance evaluations. By consistently reinforcing the importance of risk and resilience, companies can foster a shared understanding and commitment to these principles.

Creating a learning environment

A key element of a resilient culture is the continuous growth of risk and resilience knowledge among team members. Companies should invest in training programs, workshops, and knowledge-sharing platforms to empower employees to enhance their risk management skills. By fostering a learning environment, companies can build a workforce that is equipped to identify and respond to emerging risks effectively.

Communication and collaboration

Effective communication and collaboration are vital for a culture of risk and resilience to thrive. Companies should ensure that all stakeholders, including employees, management, board members, and external partners, are actively involved in risk discussions. Open and transparent communication channels should be established to facilitate the sharing of information, insights, and best practices. Stepping away from the siloed view of ‘my risk’ within departments to ‘our risk’ as a company will dismantle the compartmentalization of risk. Collaboration among different departments and functions can lead to a more comprehensive understanding of risks and the development of robust resilience strategies.

Strategic planning

Strategic planning plays a crucial role in building risk and resilience frameworks. Companies should integrate risk and resilience considerations into their strategic decision-making processes. This involves conducting scenario planning exercises to identify potential risks and develop appropriate response strategies. By aligning risk and resilience with overall business objectives, companies can make informed decisions that enhance their ability to withstand and recover from disruptions.

Clarity of aims and objectives

To effectively measure the progress of a risk and resilience culture, companies need to establish clear key performance indicators (KPIs). These KPIs should reflect the desired outcomes of risk and resilience initiatives and provide a basis for evaluating their effectiveness. Regular monitoring and reporting of these KPIs can help companies identify areas for improvement and make necessary adjustments to their strategies.

Risk culture assessment

Understanding the extent to which a risk and resilience culture is embedded across the organization is crucial. Companies should conduct comprehensive risk culture assessments to evaluate the penetration of the culture from top to bottom. This assessment should include interviews with board members, management, and employees to gauge their understanding and perception of the risk culture. The findings can guide companies in refining their risk and resilience strategies and ensuring a consistent and widespread adoption of the culture.

Scenario testing

Scenario testing is an essential tool for validating the effectiveness of risk and resilience frameworks. By simulating various risk scenarios, companies can assess the robustness of their strategies and identify potential gaps or areas for improvement. Scenario testing also encourages cross-functional collaboration, as different teams come together to analyse and respond to simulated risks. This exercise enhances the overall resilience of the organization and fosters a proactive approach to risk management.

Conclusion

As companies in the Middle East strive to navigate an increasingly complex and uncertain business environment, building a culture of risk and resilience is no longer an option but a necessity. By shifting from a traditional risk management culture to one that embraces risk and resilience, companies can enhance their ability to adapt, innovate, and thrive in the face of challenges. The key elements discussed in this article provide a roadmap for companies to embark on this transformative journey. By championing leadership, fostering a learning environment, promoting communication and collaboration, and integrating risk and resilience into strategic planning, companies can build a culture that empowers them to seize opportunities and overcome obstacles on their path to success.

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Article

Shifting from Risk Management to a Culture of Risk and Resilience in Companies in the Middle East

Introduction

The Need for a Culture of Risk and Resilience

Elements of Shifting to a Culture of Risk and Resilience

Conclusion

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Shifting from Risk Management to a Culture of Risk and Resilience in Companies in the Middle East

Introduction

The Need for a Culture of Risk and Resilience

Elements of Shifting to a Culture of Risk and Resilience

Conclusion

Speak to one of our Experts on how you can build your organizations' risk resilience

Related insights

Taking risk management to the next level: Building a resilient risk culture

Risk in Context Podcast: Building Resilience in Times of Crisis

Taking risk management to the next level: Building a resilient risk culture

The changing risk landscape for European listed firms