KPMG has released a new guide titled “Model Risk Management: A Guide for Financial Institutions in Saudi Arabia,” which serves as an essential tool for the Kingdom’s financial sector amidst its rapid expansion and digital evolution. This publication arrives at a pivotal moment, to equip financial institutions with the necessary strategies and insights to navigate through an increasingly complex industry landscape characterized by technological advancements and regulatory shifts.

Shadi Abuserryeh, partner and head of financial risk management at KPMG in Saudi Arabia, said: “As Saudi Arabia’s financial sector continues to grow and transform, the need for robust model risk management has never been more critical. This guide provides the tools and insights necessary for banks to navigate these regulatory landscapes, ensuring they are well-equipped to manage risks effectively and maintain trust among their stakeholders.”

The guide addresses the growing dependency of banks in Saudi Arabia on third-party services for model development and validation. It underscores the critical need for thorough documentation and continuous real-time monitoring to ensure the reliability and transparency of these externally developed models. Emphasizing robust governance, the guide advocates for vigilant oversight of both in-house and outsourced models, enabling institutions to proactively detect and address potential issues before they escalate.

A significant focus is placed on the integration of advanced models that account for climate risks and expected credit losses, which often rely on external variables and limited historical data. This complexity requires a sophisticated blend of qualitative approaches and expert judgment to ensure accuracy and reliability. 

The guide also prepares financial institutions for forthcoming regulations from the Saudi Central Bank, similar to those recently enacted by the UAE’s Central Bank, aimed at elevating model quality and mitigating associated risks.

The document further explores the heightened risks during periods of exceptional growth or economic stress. Factors such as rapid market shifts and changing consumer behaviors can increase data volatility, challenging the accuracy of model predictions. The scarcity of robust historical data during these times diminishes the reliability of models, and the growing complexity needed to capture such dynamic environments can lead to errors and complicate interpretation efforts. Additionally, as the reliance on these models intensifies for critical decision-making, the likelihood of inaccuracies rises, potentially leading to rushed development and validation processes.

Despite these challenges, the guide identifies significant opportunities for the Saudi financial sector. “By effectively addressing these issues, institutions can enhance their risk management capabilities and resilience against adverse conditions. The adoption of cutting-edge technologies offers potential improvements in efficiency and precision in managing risks. Furthermore, compliance with new regulatory standards can boost governance and transparency, fostering greater trust among stakeholders,” said Ovais Shahab, head of financial services — Saudi Arabia at KPMG Middle East.

Naif Alrajhi Investment, a Saudi investment group, has announced a strategic partnership with M Integrated Solutions PLC, a creative agency and global leader in live events and immersive storytelling.

The partnership will reshape the landscape of live events in the Kingdom, bringing a unique fusion of business acumen and creative storytelling that will resonate deeply with audiences.

M has a reputation for engaging with live audiences in excess of 650,000, delivering personal experiences across varied demographics and cultures, and on every continent. The company has a track record of delivering strategic, high-impact live events for governments, brands, and organizations around the world. M’s clients include the Dubai World Cup, Commonwealth Summit, COP, FIFA, Olympic Council of Asia, International Olympic Committee, Toyota, BAE Systems, Airbus, and various governmental agencies like the Department for Education, to name a few.

Salman Al-Asmari, vice president of Naif Alrajhi Investment, said: “Our alliance with M Integrated Solutions goes beyond conventional collaboration; it represents a meeting of vision and values, with both companies dedicated to fostering growth in line with the Kingdom’s Vision 2030 objectives and beyond. Together, we aim to shape the future of live, immersive storytelling, driving both innovation and emotional engagement that resonate with our people and our culture.”

Founded more than 30 years ago, M brings a heritage of excellence in strategic storytelling, audience engagement, and brand-building.

Through this collaboration, M plans to build upon and strengthen its presence in the Kingdom, positioning itself as the provider of choice for live event solutions that bridge culture, commerce acumen, and creativity to empower brands to not only tell their stories, but to engage audiences, creating moments that are unforgettable.

Jim Curley, M’s CEO, said: “This partnership reflects a deliberate strategy to formalize and expand our presence in Saudi Arabia, leveraging Naif Alrajhi Investment’s cultural and business expertise to deepen our relationships at the highest levels of government and industry. Our combined strengths will allow us to deliver a new caliber of experiences, making us the go-to agency for brands looking to make meaningful activities in the Kingdom.”

John Young, executive creative director of M, said: “Saudi Arabia has always been a canvas for remarkable creativity and innovation, and we’re thrilled to formalize our role in shaping the country’s live event marketing space. We’re excited to bring our international expertise and unique creative approach to a market that values bold ideas and groundbreaking experiences.”

The partnership is set to redefine live events in Saudi Arabia, bridging local values and international expertise to deliver unparalleled brand experiences. 

Through this partnership, both companies are committed to establishing new benchmarks for creativity, cultural resonance, and strategic growth in the Kingdom.