Voice of a GCC BDI member interview: Mohammed Hama...

Voice of a GCC BDI member interview: Mohammed Hamad Al Shehi, Deputy Director General at the Department of Finance, Government of Dubai

Mohammed Hamad Al Shehi, is the Deputy Director General at the Department of Finance, Government of Dubai, since February 2006 and also the Acting Executive Director at the Dubai Financial Support Fund-Government of Dubai, since September 2013. Mohamed Hamad Al Shehi has a total experience of over 20 years in Executive Management positions within the framework of the Government of Dubai and the private sector.

Mohamed Hamad Al Shehi is holding an Executive Master of Business Administration from Zayed University and a Bachelor of Arts -Major in Accounting from the U.A.E. University.

What are the main corporate risks facing UAE firms currently?

Majority of the corporates in UAE are in the oil & gas, trade and real estate sectors. AED being pegged to US Dollar, the relative valuation of USD is one of the major risks faced by corporates as it directly impacts demand for the key economic sectors in UAE. This also impacts the credit availability in the economy.

UAE has strong trading relationships with many countries, particularly economies in Asia and Europe, including China, India. To the extent that there is a significant slowdown in the economies of any of these countries or regions, this may have a negative impact on UAE corporates.

Reflecting the fact that the UAE’s currency is pegged at a fixed rate to the U.S. dollar, any significant appreciation in value of the U.S. dollar, whether driven by increasing U.S. interest rates or other factors, could result in UAE firms becoming less competitive.

What are your top line corporate governance suggestions for risk-proofing companies?

UAE ranks favorably on many of the governance indicators, however there still needs to be work done on some of the aspects. A new companies law has come into effect last year which addresses some of these issues and strict monitoring and adherence by the Board of directors/stakeholders of corporates will be critical in risk proofing the companies. The risk management strategies formulated by the companies should be integrated with the management actions of staff at all levels in the organization, including recognition that all staff have a responsibility to manage risks.

What is your economic outlook for the UAE this year? And what risks could be on the horizon?

UAE enjoys a relatively diverse economy when compared to other Gulf Co-operation Council (GCC) economies. Real GDP should be growing at around 3.0% this year due to the improvement in the Oil prices in the second half of 2017. However, any significant negative impact on international oil prices may have an impact on regional spending and liquidity and would consequently be likely to affect UAE’s economy indirectly, through an impact on the trade, construction, real estate, tourism and banking industries given the openness of the economy.

What are the main concerns that should be considered when formulating risk management strategies?

Different risk categories require different approaches and these need to be addressed separately while formulating risk management strategies:

Preventable risks: Clear identification and definition of preventable risk. This can be managed through effective communication of rules and guiding employee behavior.

Strategic risks: These are taken to improve business performance and hence risk management must be lead from the top leadership. Improving the risk adjusted returns should be the constant goal of the leadership.

External risks: these risks lie outside the company’s control; companies should focus on identifying them, assessing their potential impact, and seek advice from external independent consultants.

How is risk management strategy different in government entities compared to private entities?

Risk management approach is in fact, quite similar for both government and private entities. Both entities are exposed to similar risks, however the stakeholders and time frame to address these are different. In both cases, active and cost-effective risk management requires managers to think systematically about the multiple categories of risks they face so that they can institute appropriate processes for each.