The business case of risk management implementation and reporting by Saudi publicly traded companies in the Food & Drink industry and the risks and opportunities faced by them under the shadow of Saudi Vision 2030.

Abstract

This dissertation provides insight into the Saudi public companies in the food and drinks sector and the benefits of having integration of risk management in their operating activities. The study is initiated with a literature review that addresses four aspects within risk management and reporting within Saudi public companies in the Food & Drink industry. The first set of findings of the literature review emphasises the importance of legislation on risk reporting and the motivation behind reporting in this industry which was also found to be less price-sensitive than other industries in the Saudi Exchange. Another finding in the literature review is that the demand for food and drinks can affected by price changes resulting from changes in value-added tax, such as an additional tax on products that was seen to decrease demand for products by 35% in one instance (AlSukait, 2020). Then, the Saudi Vision 2030 document was critically analysed through a variety of sources that highlight the importance of updating the document to suit today’s needs more effectively in a way that is like Bayesian Updating (Retzer. 2006). In support of the literature review, the methodology is a meta-analysis of seventy-three financial statements analysis of three different firms in the Saudi Food and Drink Industry. The results were based on five criteria that were formed based on the findings of the literature review and each criterion was rated out of five to highlight the quality of publications. The limitations of the study were mentioned to be a qualitative study with minor quantitative analysis to further test the formed hypothesis. The discussion section addressed the idea of risk reporting and the limitations of the study, there was a direct relationship between reporting and the effective mitigation of risks. There were 3 considerations for the motivation for detailed risk reporting in positive and negative cases where legislation and the services provided by auditing companies were implied to be significant inducers of this. Additionally, there was a discussion of the common practices within the risk reports of three chosen public companies in the Food and Drink industry which were Savola, SADAFCO, and Herfy FSC. The risk report analysis was viewed alongside the returns on investment in the past five years and the VaR-95 values. The most common practice for these firms in the food and drink industry was identifying and profiling risks in some cases without proceeding with other core risk activities such as modelling, mitigating, and controlling.