The Middle East is attracting global investment, particularly the Gulf area. Learn more about risk management within the gulf.

This social dimension of risk management demands a change in how MNCs run. Adapting to regional traditions is not only about being familiar with business etiquette; it also involves much deeper cultural integration, such as for instance understanding regional values, decision-making designs, and the societal norms that affect business practices and employee behaviour. In GCC countries, successful business relationships are made on trust and individual connections instead of just being transactional. Additionally, MNEs can benefit from adapting their human resource management to reflect the cultural profiles of local employees, as factors influencing employee motivation and job satisfaction differ widely across countries. This calls for a change in mind-set and strategy from developing robust monetary risk management tools to investing in social intelligence and regional expertise as consultants and lawyers such Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest.

Much of the present literature on risk management strategies for multinational corporations demonstrates particular uncertainties but omits uncertainties that are hard to quantify. Indeed, lots of research in the international management field has centered on the management of either political risk or foreign exchange uncertainties. Finance and insurance literature emphasises the risk factors for which hedging or insurance instruments can be developed to mitigate or move a company's danger visibility. Nonetheless, present research reports have brought some fresh and interesting insights. They have sought to fill area of the research gaps by giving empirical understanding of the risk perception of Western multinational corporations and their management techniques at the firm level within the Middle East. In one research after gathering and analysing information from 49 major international companies that are active in the GCC countries, the authors discovered the following. Firstly, the risk connected with foreign investments is clearly even more multifaceted compared to often examined factors of political risk and exchange rate visibility. Cultural danger is regarded as more crucial than political risk, financial risk, and financial danger. Secondly, even though aspects of Arab culture are reported to have a strong impact on the business environment, most firms battle to adapt to local routines and customs.

Despite the political uncertainty and unfavourable fiscal conditions in a few parts of the Middle East, international direct investment (FDI) in the area and, especially, in the Arabian Gulf has been steadily increasing within the last 20 years. The relevance of the Middle East and Gulf markets is growing for FDI, and the associated risk is apparently crucial. Yet, research on the risk perception of multinationals in the region is lacking in amount and quality, as consultants and solicitors like Louise Flanagan in Ras Al Khaimah would probably attest. Although various empirical studies have examined the effect of risk on FDI, most analyses have been on political risk. Nonetheless, a brand new focus has surfaced in present research, shining a limelight on an often-ignored aspect particularly cultural variables. In these pioneering studies, the researchers noticed that companies and their administration frequently seriously brush aside the impact of social facets because of a not enough knowledge regarding cultural factors. In fact, some empirical studies have discovered that cultural differences lower the performance of multinational enterprises.