RISK MANAGEMENT DURING TIME OF FINANCIAL TURBULENCE: THE CASE OF SAUDI ARABIA AND OMAN

Abstract

Risk and economic activities cannot be separated. Risk can be viewed from various levels such as investors, firms and country level also it has various types such as market, operational, and credit risk. In general risk is associated with the uncertainty about various events. The global financial crises created various doubts about the effectiveness of traditional risk management approaches. It seems that the relevance of risk management was lost. The global financial system failed to prevent the global crises and to minimize its impact. It becomes more apparent that risk sharing can be more fruitful than risk taking. Every country is trying to deal with financial shocks. The 2014-2015 crude oil prices have raised the risk of gulf countries heavily dependable on crude oil export revenues for development and financing expenditures. Saudi Arabia and Oman economies are greatly dependent on their oil and gas sector returns. In fact, reliance entirely on one industry to build economic development would be a serious risk, in case of falling prices or production capacity due to various reasons. The two countries deal with financial turbulence differently. What they did and are doing is the concern of this paper.