The development of the discipline of operational risk faces unique challenges in the Middle East, according to a range of experts speaking at the first annual OpRisk Middle East conference this week in Dubai.
The top challenge for op risk executives in the region lies in introducing an op risk culture throughout their firms, says Moh'd Nassar Nassib Barakat, consultancy director at Aldar Audit Bureau, speaking at the event. The best way to introduce this culture is to get senior management and the board of directors to buy into the project. "Once the board and senior management buy in, it will happen," he says.
He says op risk executives must work to get rid of the view that controls are there to prevent business lines making money, and instead instil a mindset that op risk executives are there to help the business achieve its goals, and that line managers are responsible for those goals.
He stressed the importance for op risk executives to co-ordinate their efforts with internal audit, compliance and risk management, so that the corporate governance framework at the organisation is not overly burdensome to the business lines, and so that the different departments can all contribute their understanding to the information-gathering process. All three departments need to be "moving in the same direction", he says.
Lastly, firms need to overcome the lack of loss data, and individuals’ reluctance to share their loss experiences. To do this, firms need to change their "scapegoat" culture and make it easier for individuals to report losses. He also says firms need to ensure staff are trained on how to book their losses correctly.