What are the main risks facing the Middle East and North Africa?
It’s clear to anyone that works in risk management, that it is harder than ever to manage and mitigate risk. The risk landscape in 2019 is increasingly complex and interconnected, and risks are no longer constrained by borders or bound by industries as they once were.
Global forces and global risks shape what happen at a regional level. We have previously made the argument that the Chief Risk Officer has become the most important role in an organisation and that is as true for organisations in Africa and the Middle East as it is for companies in the US, Europe and Asia.
Africa is a continent that Oxial understands particularly well. Earlier this year our risk experts participated in the Dakar Conference looking at managing risk in the digital age, while our partnership with BDO Morocco helps ensure African businesses are 100% compliant with global and local requirements.
What are the biggest risks facing the Middle East and North Africa (MENA) and what can organisations do to manage and mitigate those risks?
Assessing the risk landscape from a global and local perspective
A recent World Economic Forum (WEF) briefing paper – The Middle East and North Africa Risks Landscape – addressed the huge opportunity facing organisations in the MENA region but also highlighted the potential risk for those companies unable or unwilling to adapt to the changing risk landscape.
Looking at risk from both a global and local perspective, the briefing paper found that because MENA is home to more natural-resources dependant economies, and because MENA has more existing political and societal issues, the impacts of global risk could be more pronounced here.
The global risks identified in 2019 included: economic confrontations between major powers; erosion of multilateral trading rules and agreements; political confrontations between major powers; and different types of cyber attack – data theft and disruption of operations and infrastructure.
Global trade tensions – in January 2019 the International Monetary Fund (IMF) cited trade disputes as a reason for downgrading its global growth projections. In MENA, with an abundance of trade-dependent economies, such developments hold greater risk than in other regions.
Climate change – this is of course a global issue, for all citizens and businesses, but another risk that is perhaps more pronounced in MENA. In 2018 Algeria had the hottest temperature – 51.3ºC – ever recorded in Africa, but for many business leaders in MENA this would appear to be less of a priority than elsewhere.
In the WEF paper, global leaders ranked environmental risks highly as a likely risk, yet business leaders in MENA did not include it. This is an important issue – there are 24 port cities in MENA at high risk of rising waters – and there are also a number of MENA economies with an over dependence on fossil fuels. Reducing this is necessary, but also potentially very costly for organisations in MENA.
Governance in MENA – as firms in MENA trade more and more with different countries around the world, they need to be increasingly aware of the governance and compliance requirements that come with that. Not only must they remain compliant with local regulation, but other region’s regulations come into play to.
GDPR, which came into effect in May 2018, requires any organisation that holds data on EU citizens to change how that data is stored, managed and accessed. Failure to comply could result in a major fine or long-term brand damage, and it applies to businesses in MENA as much as it does businesses actually in the EU.
Mitigating risk in 2019
These are just some of the global risks that can have a heightened impact on organisations in the MENA region – there are many others to consider too. So in such an interconnected and complex risk environment, how can firms be expected to manage and mitigate this risk effectively and efficiently?
Addressing risk with focus and appropriate seriousness is a good place to start. The impact of risk can be huge and any MENA business not taking it seriously will suffer the consequences, sooner rather than later. It’s not uncommon however, for firms in MENA to approach risk management with just one or two employees – akin to mission impossible.
Modern risk management requirements a different approach, which is why Oxial’s partnership with BDO Morocco is proving so popular with organisations in the region. OXIAL’s automated platform monitors every element of compliance and risk to ensure nothing gets missed, while BDO’s consultants advise and support with their deep understanding of modern compliance and risk.
Digitised risk management
This allows BDO Morocco to offer a fully digitised compliance and risk management service, that allows African businesses to approach all compliance and risk as a continuous process, offering 100% compliance with global and local requirements.
Zakaria Fahim, Managing Partner & Head of Advisory, BDO Morocco describes it as follows:
“Both regulation and inherent risk is increasing for our clients in this fast-changing world. The BDO GRC supervised service is a subscription-based model where the appropriate module and regulatory content and best practices are selected to meet the compliance needs of our client. Our digitalized service is unique and totally disruptive, offering to BDO a very strong differentiation in the market.”
A digital approach to risk management is what will be most successful and effective for organisations in MENA. Managing risk is harder than ever and firms needs the right tools and the right expert input to do so.