The United Arab Emirates is home to a diverse and thriving economy, attracting investors and business owners from around the world. Entrepreneurs can pursue various professional interests in the Emirates from the worlds of finance, technology, healthcare, real estate, and other professional services. However, there are regulatory obligations, business risks and corporate responsibilities that companies also need to manage. This is where the critical value addition of Governance, Risk and Compliance (GRC) services comes in.
For UAE businesses, a GRC framework can improve decision-making and responsibility, and ultimately promote the company's long-term interests. With the experience of AJMS Global, companies can identify their business risks, implement adequate controls, and develop pragmatic compliance strategies that meet their business needs.
What are Governance, Risk and Compliance Services?
Governance, Risk and Compliance (GRC) services combine three core aspects of a business to create a sustainable competitive edge.
- Governance defines the policies, procedures, and responsibilities that help guide and shape decisions within an organization. It fosters a culture of accountability.
- An effective risk management strategy helps businesses anticipate and limit the impact of adverse events to their business performance, financial health and/or reputation.
- Compliance covers a business's ability to understand and adhere to legal obligations, industry standards and internal policies.
Integrating these three core elements of a business allows companies to protect their interest and move beyond crisis management.
Why are GRC Services important for UAE businesses?
There are several regulatory requirements that pertain to different business activities and sectors in the UAE. Depending on the nature of the business, the requirements may vary for companies in the mainland, free zones, regulated sectors, etc.
A GRC framework enables organizations to fulfill their obligations in an efficient manner.
1. Managing Regulatory Requirements
Businesses must know the laws, rules, and regulations that are applicable to their operations. These may include data protection laws, financial reporting laws, anti-money laundering laws, or laws and regulations that are specific to a business's sector.
GRC services may help organizations understand their compliance responsibilities, capture the policies that are applicable to them, and put in place mechanisms for regulating changes in the law.
2. Identifying and Mitigating Business Risks
All businesses face risks including operational risks, financial risks, cyber security risks, and other risks to a business's reputation.
Risk management services may help businesses identify and evaluate their risks and prioritize responses to these risks.
3. Improving Corporate Governance
Sound corporate governance fosters a culture of ethical behavior, and transparency. Good governance outlines the duties of directors and defines how the company makes important decisions.
In the UAE, good governance may help companies improve oversight and communication. This may build trust with a company's employees and customers, as well as business partners.
Stronger Internal Controls: Identifying weaknesses in business processes helps to eliminate or minimize them.
Increased Stakeholder Confidence: Transparent governance and effective management of risk helps build confidence of clients, investors, suppliers and regulators.
Improved Business Resiliency: Preparing to address the risks the organization faces helps build the organization’s ability to respond to challenges.
The level of these benefits depends on how well the GRC framework represents the organization’s size, industry, and complexity.
How to Develop an Effective GRC Framework in the UAE
For the GRC framework to be effective, the proportionate and workable aspects of the framework must be considered. UAE businesses can implement the following.
1. Assess Current Position
Review business processes and supporting policies, procedures and controls. Identify gaps, overlaps, and areas where risks may not be adequately managed.
2. Define Relevant Regulations
Identify the legal and regulatory requirements applicable to the businesses and the jurisdictions where the business is operated. Seek the advice of subject matter experts where needed.
3. Establish Suitable Policies and Controls
Policies should provide management direction on how employees should manage risks, protect information, and provide whistleblowing and process controls. Assign responsibility for managing and reviewing the controls.
4. Educate Employees
Compliance is of little value if risks are not managed and processes are not followed. Employees should be trained on how to manage risks and comply with policies, procedures and controls.
5. Monitor, Review, and Improve
GRC involves continuous processes and reviews, and helping businesses respond effectively to risks. Reviews help in identifying and managing risks. They aid in developing risk management consultancy strategies and policies.
How AJMS Global Can Help You With Your GRC Journey
A flexible advisory partner can make it easier to establish and implement governance, risk and compliance practices. AJMS Global can be considered by UAE businesses for support to assess their risks and compliance needs.
Each business has different requirements. Accordingly, a tailored GRC approach may include reviewing and enhancing controls and processes to ensure compliance, performing risk assessment, enhancing procedures to govern the business, implementing processes to monitor risks, and performing oversight functions. The scope of the approach would depend on the requirements of the business and the services agreed with its advisory partner.
It is necessary for businesses to focus on solutions which are industry and UAE-context specific and help align with the operations, obligations and resources of the business, and ultimately achieve the goals and strategic direction of the business.
Some common challenges which UAE businesses need to avoid include compliance as an afterthought, using outdated policies and hardly reviewing them, not holding a responsible person for risks management, and relying on compliance frameworks to cover all UAE requirements, among others. Businesses must verify their obligations and consider if changes are needed to their framework to meet the obligations, as their operations may also change.
GRC services are particularly relevant for UAE-based organizations looking to put in place better controls to facilitate effective decision-making. The integration of governance practices, risk management and compliance processes enables an organization to gain greater resilience and prepare to address varying challenges of doing business.
Conclusion
Through a structured approach and appropriate professional guidance, GRC services can be transitioned from an administrative obligation to a more strategic element of a business. AJMS Global can be one of the options for organizations wishing to refine and improve their governance, risk and compliance approach in the UAE.
To begin with, understand your obligations, evaluate where you stand today and figure out what can make the biggest difference to your business.
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