Are banks in GCC trailing behind on operational risk management???

Banks in the Gulf Cooperation Council (GCC) region are generally making strides in operational risk management, but some challenges remain that may cause them to lag behind global best practices in certain areas.

Strengths:

1. Regulatory Environment: The regulatory framework in GCC countries has been improving, with central banks and regulatory authorities in the region increasingly focusing on operational risk management. For example, the Central Bank of the UAE and the Saudi Arabian Monetary Authority (SAMA) have been pushing banks to adopt stronger risk management frameworks.
2. Investment in Technology: Many GCC banks have invested heavily in technology to enhance their operational risk management, particularly in areas like cybersecurity and digital transformation. These investments have helped banks to better manage risks related to fraud, data breaches, and other operational threats.

Challenges:

1. Consistency in Implementation: Despite the regulatory push, the consistency and depth of operational risk management practices can vary significantly across banks in the region. Smaller banks, in particular, may struggle to keep up with the required investments in technology and expertise.
2. Focus on Financial Risk: Traditionally, GCC banks have focused more on financial risks (like credit and market risk) than on operational risks. This has led to a lag in the development of robust operational risk management frameworks compared to more mature markets.
3. Evolving Threat Landscape: The rapid pace of digital transformation in the region, coupled with a growing reliance on digital banking, has introduced new operational risks. Banks are still adapting to manage these effectively, especially as cyber threats become more sophisticated.
4. Human Capital: There is a shortage of skilled professionals in the region who specialize in operational risk management. This talent gap can hinder the effective implementation of advanced risk management practices.

Conclusion:

While GCC banks are not necessarily trailing behind globally, they face specific challenges that need to be addressed to fully align with international best practices in operational risk management. The ongoing improvements in regulatory oversight, technological investments, and a growing focus on operational risks suggest that the region is moving in the right direction, but there is still work to be done.