Digital, compliance and people risks are top of mind for Middle East organisations

Digital risks amid the Middle East’s accelerating transformation

The good news for Middle East business leaders and their audit, risk and compliance teams is that they are operating in a region that has returned to growth after the COVID-19 slowdown, as transformation agendas gather momentum. 69% of respondents, the same proportion as globally, say revenue will increase by up to 15% over the next 12 months. The more concerning news is that the same digital technologies, which are helping to drive the Middle East’s transformation, are also the source of increasingly sophisticated cyber attacks and other digital threats.

Middle East business leaders are acutely aware of these hazards. In our latest Middle East CEO survey, 57% said cyber risks would have a negative impact on their company over the coming year, significantly more than the global average. To counter digital threats, 39% planned double-digit investments in cybersecurity and data privacy over the next three years.

• 92% find keeping up with the speed of digital transformation in their organisation is a significant challenge
• 93% say technology solutions that do not work together are a significant challenge
• 56% are planning to spend more on cybersecurity services in 2022

Compliance risks in the Middle East’s rapidly evolving regulatory environment

Across the region, compliance features prominently on corporate agendas, for a range of reasons. Companies seeking to list on overseas stock exchanges must meet stringent international reporting criteria, while within the region, central banks are introducing rigorous regulations to align the Middle East’s financial sector with the highest global standards. Meanwhile, investors conducting due diligence on potential target companies are demanding full transparency in areas such as corporate governance. 

The Middle East risk survey findings reflect this increasingly strict regional compliance environment. For example, 91% say external or compliance pressures are taking up a significant proportion of risk owners’ and risk functions’ time and resources, with 78% sufficiently concerned to be addressing this issue formally. These pressures cover the full range of policy and regulatory developments. More than half of Middle East respondents, in line with the global survey average, are either extremely or very concerned by issues such as data protection laws, environmental protection regulation, and cryptocurrency and other digital payments regimes.  

• 91% say external or compliance pressures are taking up significant amounts of the resources and time of the risk functions and risk owners
• 75% are increasing expenditure on reporting and visualisation technology in 2022
• 21% are realising the benefits of achieving compliance through having implemented design with code directly in business and digital applications

People risks – upskilling for a digitalised future

The best risk technologies are, of course, useless if organisations do not have the people to implement or operate them. On this front, it is worrying that almost all Middle East respondents say risk owners and risk functions in their businesses lack the required skill sets to perform their roles properly – roles which inevitably will require constantly upgraded digital expertise as organisations seek to replace old-fashioned and time-consuming manual processes. 

To some extent, it is positive that more than two-thirds of Middle East respondents say they are addressing these risk skill shortages formally, either at an enterprise-wide level or within individual business departments. The appetite clearly exists across Middle East workforces for digital upskilling and ongoing (internal or external) training in new technologies. For example, our latest Hopes & Fears survey of young Middle East employees found that more than half feel they have limited opportunities to learn from colleagues with advanced technical or digital skills. 

• 89% of risk owners and 90% of risk functions lack required skills sets to a significant degree
• 90% complain of high employee turnover in their risk department
• 43% say they have already complemented risk technology investments with people and process changes

Global risks still involve regional risk management strategies

The increasingly global nature of risks means the challenges faced by Middle East companies are often the same as those confronted by their international peers. This trend is likely to intensify, as the Middle East becomes even more integrated with the global economy. For the same reason, the approach to prudent risk management in a volatile business environment that we identify in our global risk survey, is equally relevant for Middle East organisations. 

Above all, risks are often interconnected, requiring collaborative, multi-disciplinary management, and the best technology to achieve well-informed and up-to-the-minute insights.