Qabas consulting

Governance and risk management

An introductory overview of this service

In the Kingdom of Saudi Arabia, governance and risk management standards and frameworks have been developed to align with international best practices and to enhance transparency and accountability in companies and institutions. The Saudi framework focuses on improving the regulatory environment and ensuring corporate sustainability, and relies mainly on the rules and instructions of the Saudi Capital Market Authority (CMA) and the Ministry of Commerce and Investment, in addition to the directives issued by financial institutions such as the Saudi Arabian Monetary Agency (SAMA).

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Governance framework in Saudi Arabia

1. Transparency and disclosure: The need to provide accurate and transparent information to shareholders and stakeholders, including financial and non-financial reports.
2. Accountability: Defining the powers and responsibilities of the Board of Directors and Executive Management to ensure effective oversight.
3. Shareholders’ rights: Ensuring the protection of shareholders’ rights and facilitating their participation in making important decisions.
4. Executive management and independents: Strengthening the role of independent members of the Board of Directors to ensure balanced and objective decision-making.

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Standards and framework for risk management in Saudi Arabia

Identify, evaluate and manage risks:
1. Operational risk management: includes identifying, evaluating, and managing operational risks that may affect the performance of financial institutions.
2. Market risk management: Establishing policies and procedures to manage market risks that may arise from changes in interest rates, exchange rates, and commodity prices.
Enterprise risk management system:
1. Identify risks: Identify all potential risks that the organization may face.
2. Risk assessment: Analyze and evaluate risks in terms of their impact and probability.
3. Risk response: Develop strategies to deal with risks, including mitigation, transfer and acceptance.
4. Monitor and review risks: Monitor risks and update response strategies periodically to ensure the effectiveness of the risk management system.

Supporting legislation and regulations:
1. The new companies law:
It aims to modernize and improve the legislative framework for companies in the Kingdom, and includes many provisions related to governance, disclosure and social responsibility.

2. Regulations The General Investment: 

Authority provides regulations and regulations aimed at improving the investment climate in the Kingdom and ensuring that companies adhere to the highest standards of governance.
The standards and framework for governance and risk management in Saudi Arabia aim to enhance transparency, accountability and achieve justice in the financial market, while improving the regulatory environment and ensuring corporate sustainability. This framework is based on a combination of national legislation and international standards, and is supported by ongoing supervisory and regulatory efforts by relevant bodies.