Mandatory risk reporting to enhance firm’s risk awareness

Capital Market Authority (“CMA”) requires firms to submit semi-annual risk report

Kuwait City, May 23, 2012: The recent financial turmoil has had a deep impact on the economies globally, and Middle East is no different. Policy makers in the region are taking bold and timely steps to deal with the financial instability and crises.

Kuwait has not been insulated of this crises and the banking and investment sector of the country has been deeply impacted. Central Bank of Kuwait (CBK) has been proactive in taking timely measures in coordination with the government to provide liquidity to help stabilize the economy. The current global situation has clearly demonstrated the importance of sound risk management practices in financial institutions.

As the crises in Europe deepen which could have a severe impact on the region once again, the importance of risk management and reporting in company’s management and operations is at an all time high. The importance of management initiatives in the collective effort to ensure proper risk management systems are in place is imperative in this scenario. As a process risk management is designed to provide assurance regarding the efficiency and effectiveness of the operative units within the company, reliability in the financial reporting and compliance with laws and regulations.

To keep the awareness levels of risks high in all the firms in Kuwait, the Capital Market Authority (“CMA”) mandates all licensed firms to prepare and submit risk reports semi-annually. The Article 190 of the by-law states “The licensee should apply a risk management system and appoint an officer to be approved by the Authority to handle the duties of managing and addressing risks associated with his activities and submit a special risk report to the Authority on a semiannual basis.”

All the licensed firms who carry out activities under the CMA are required to report their risks semi-annually. In order to develop these reports, a complete profiling of the key risks faced by the company needs to be identified. Most firms in Kuwait face market, investment, liquidity, concentration and credit risk and ways to identify, measure, monitor, report and mitigate these risks are important for the firm to progress ahead of its peers. A complete policy and procedure manual, based on an enterprise risk assessment framework, is required to cover the entire gambit of risk and this has been mandated by the CMA too. However, the risk reporting can be looked independently as well, in the light of key risks that the firm in a particular sector is most likely to encounter, based on the risk assessor’s experience and knowhow in the sector.

Grant Thornton Advisory Services Al Aiban & Al Qatami Co. offers a wide range of ERM based framework under it’s “Business Risk Services” offering. We understand the process to identify, monitor and control risks and help firms to iteratively realign their risk philosophy, define the risk appetite and enable key risk management policy and procedures. Our risk reporting tools are best-in-class and our resources use key quantitative techniques to give you insightful results across the spectrum of risk platforms like liquidity risk, market risk, currency risk etc. Our risk reports have illustrative dashboards to ease the understanding of the contents. We develop profile of keys risks, mitigation plans, updates of mitigation plans and key risk initiatives to ensure that the risk report is comprehensive and in-depth.

We have in-depth experience in the financial services and investment sector which helps us to provide our clients with decision-supporting insights.