Risk management activity is a mandatory requirement for companies listed on the Boursa Kuwait and companies licensed by the Capital Markets Authority (CMA).
These companies have two options: the first option is to establish a job structure headed by an incumbent registered with the CMA, specializing in risk management and responsible for executing risk management activities, while the second is to outsource the risk management activity to an independent external source on behalf of the company. The choice between these two options depends on both cost and benefit.
Does the Capital Markets Authority allow listed and licensed companies to outsource the Risk Management Activity?
Yes, the Capital Markets Authority allows it as the Executive Bylaws of Law No. 7 of 2010 regarding the Establishment of the Capital Markets Authority and the Regulating Securities Activities in Module 5, Chapter 3, Article 3-2-8 sets forth the following:
A licensed person may engage an external firm to perform the tasks of the registered jobs as follows:
An external firm may be engaged to perform the following tasks of the registered jobs:
- Risk Management Officer
What are the advantages of outsourcing risk management activity?
Here are the key advantages that business entities gain from outsourcing risk management activities:
- Access to specialized knowledge and expertise possessed by the external firm providing risk management services.
- Cost saving compared to maintaining an in-house risk management team.
- Enable the business entity to focus on its core activities, strategic initiatives, and revenue-generating operations.
- Access to advanced technology and tools used by the external firm, such as risk assessment software and tools.
- Reduce the liability charged by the business entity and obtain risk management services according to the changing needs of the business.
- Ensure compliance with the latest standards and practices in risk management.
- Provide objectivity in the risk management process, as the external firm is not influenced by internal factors within the business entity.
- Rapid response to emerging risks, helping the business entity effectively deal with changing circumstances.
What is the added value for business entities from outsourcing risk management activity?
- Ensuring compliance with legal and regulatory mandates in Kuwait.
- Increasing competitiveness and flexibility in doing business while reducing costs.
- Enhancing the trust of stakeholders in the business entity.
What are the services provided by Baker Tilly Kuwait?
Outsourced risk management activity