ME PoV Spring 2020 issue

Stay calm and be prepared

About this issue

If you went to sleep a little early on New Year’s Eve 2019 and woke up early in March 2020, you’d be forgiven for thinking you had woken up in another time, or another place, or both. Political maneuvering in the region, a plunge in the price of oil and stocks and the COVID-19 pandemic, have all contributed to a sense of dull ache and unease, to put it mildly.

How well you respond to these jolts, as an organization, depends a lot on how well prepared you are. The more precautions you’ve taken, the wider your margin of tolerance for uncertainty and the more calmly you can respond.

This is the argument made by Vuk Prevelic in his article Fix, sell, or close? The author argues that companies are “forced to navigate evolving complexities on a daily basis.” As such, it is important now to “take a step back and consider a plan for non-core, or underperforming operations that could benefit from a change in trajectory.”

In essence, the article is about building resilience and at no time is this more pertinent than now. Bart Cornelissen and Yasmin Fansa discuss resilience in the oil and gas industry as it faces its biggest crisis in decades. “Future-proofing organizations is building resilience and placing it at the core of the organization’s strategy,” they say, “addressing strategic drivers of various market environments to determine implications for industry dynamics and building optionality to gain flexibility to react to the most recent market developments quickly.” 

Another good example of being prepared is IFRS 17. Despite the standard not being effective until 1 January 2022, Elias Ma’ayeh and Zeeshan Abbasi believe it is important to be discussing it now. “The reason lies in the complexity of the standard itself, not only with respect to its application, but also in relation to its interpretation,” the authors say in their article New kid on the block. Here are two people who will not be surprised when the standard comes into effect.

If you cannot always be prepared—and it does happen to the best of us—then it is important to remain agile, as advocated by Ziad Zakaria and Adeel Khan Legari. In their article on the importance of the role of the Project Management Office (PMO), Transforming tradition: the Project Management Office, they argue the case for the PMO renouncing traditional practices to better respond to technological disruption. “While some organizations are thriving,” they write, “others are losing their market share […] organizational agility is the need of the hour. The PMO can be a key differentiator.”

Arjit Bhattacharjee agree. “With the rapid advent of information technology and globalization,” they write in their article The hammer of economic substance: Will the shell crack?, “physical barriers and distances were no longer an impediment. Businesses had to become agile.” And the ones who did, managed to reap great benefits, especially when it came to taxation. Now the world, or the European Union at least, is trying to catch up. New Mandatory Disclosure Rules that come into effect on 1 July 2020 will allow EU member states to “promptly react against harmful tax practices and close loopholes, undertake adequate risk assessments and carry out targeted tax audits where necessary,” write Abi Man Joshi, Martin Walker and Jallu Fehar in My house, my rules.

Perhaps the best way to stay prepared is to keep up with the knowledge. The more informed we are, the less surprised we are, the more prepared we feel and the less our instinct to panic. Our other articles in this issue, Challenges of IFRS 9 modelling in the UAE banking industry by Firas Anabtawi and Marcelle Hazboun and Keeping pace with financial crime by Nick Athanasi, Nipun Srivastava and Nicki Koller, also serve to inform and educate about current challenges in global finance. With the Middle East Point of View, you can always be sure to stay updated on the issues that matter for your business, so you can always stay calm and be prepared. 

Fix, sell or close?

Forced to navigate evolving complexities on a daily basis—from regulatory changes to political risks and new technologies—management teams are often left with limited capacity to focus on all the required facets of a business.

Click here to read the full article

Building resilience

As the oil industry faces the biggest crisis in decades, how should leaders build resilience in light of an uncertain future?

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Transforming tradition: the Project Management Office

While some organizations are thriving, others are losing their market share. How does this digital transformation affect the Project Management Office (PMO) and what role can the latter play in this transformation process?

Click here to read the full article

Challenges of IFRS 9 modelling in the UAE banking industry

The struggles and challenges emanating from IFRS 9 reside not only in the lack of data availability, experience and available resources but also in the lack of clarity from regulatory expectations. The impact of IFRS 9 implementation has gone beyond a simple update of accounting policies.

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My house, my rules

New Mandatory Disclosure Rules (MDR) come into effect in the European Union (EU) on 1 July 2020 for cross-border arrangements that concern at least one EU member state. These will have a far-reaching impact in the Middle East.

Click here to read the full article  

The hammer of Economic Substance: Will the shell crack?

Perhaps it all began when the worlds of commerce were largely distant to each other and businesses were about touch and feel, brick and mortar. Geographical barriers divided economies and trade was largely opaque due to the unavailability, or slow exchange, of information. What followed cannot be deemed as anything less than a renaissance of the global economy.

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Keeping pace with financial crime

Banks today facilitate millions of transactions daily, many of them cross-border, and rely on expensive transaction monitoring systems to monitor them and report the suspicious ones for investigation.

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New kid on the block

IFRS 17, the latest standard issued by the International Accounting Standards Board (IASB), establishes principles for the recognition, measurement, presentation and disclosures of insurance and reinsurance contracts issued and held by entities. The standard, similar to IFRS 4, focuses on types of contracts rather than types of entities and hence, generally applies to all entities that write insurance contracts.

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