Risk management is a critical function for any business entity in the course of managing traditional risks and risks expected as a result of rapid changes around the world due to uncertainties in economic, political, environmental or health aspects. The COVID-19 pandemic and consequences thereof have demonstrated these risks.
In the context of risk management, any business entity needs a framework setup to manage any type of risk including traditional or newly emerging risks.
In this context, many professional and supervisory bodies are paying special attention to designing risk management framework due to their crucial role in mitigating the risk impacts and maintaining business continuity.
What are the international standards governing the Design of Risk Management Framework?
There are several accredited international risk management bodies, e.g. the UK-based Institute of Risk Management (IRM), where each body issues its own standards that govern the design of risk management framework. It is noteworthy that all these standards constitute best global practices. However, if the regulators’ instructions define specific requirements, then such instructions shall prevail over the international standards.
What are the regulatory requirements of Design of Risk Management Framework and Systems?
Article 6.3 of Module 15 “Corporate Governance” of the Executive Regulations of Law No. 7 of 2010 regarding the Establishment of Capital Markets Authority and Regulation of Securities Activity, sets forth the requirements of risk management framework as follows:
“The company organizational structure as approved by the Board of Directors shall have an independent risk management department/ office/ unit, which shall primarily measure, monitor, and mitigate all types of risks encountered by the company in accordance with the following:
- The company shall apply effective systems and procedures of risk management, so that it can perform its key functions, i.e. measuring and monitoring all types of risks to which the company is exposed, provided that such process shall be conducted periodically and such systems and procedures shall be amended as and when necessary.”
What is the added value from the Design of Risk Management Framework to business entities in Kuwait?
- Safeguard and maximize enterprise value.
- Reduce impact of various types of risks through effective risk management framework that shall identify, measure, analyze, and use effective techniques to address or mitigate such risks.
- Improve the business’ operations and increase awareness of critical operational aspects.
- Cost savings and avoidance of financial losses.
- Compliance with laws, regulations, resolutions, and instructions issued by regulatory authorities; and
- Enhance the stakeholders’ confidence in the business entity.
Why Baker Tilly to provide this service?
Baker Tilly is distinguished by specialist professional experience and offers the following characteristics carrying added values to our clients as follows:
- A global consulting firm operating in the State of Kuwait
- Baker Tilly’s local experience under international umbrella
- Professional bilingual team with in-depth experience in providing risk management services
- Baker Tilly’s experience in the matrix of regulatory instructions in the State of Kuwait related to Design of Risk Management Framework