Find out more about how exactly Western multinational corporations perceive and manage dangers in the Middle East.

This social dimension of risk management demands a change in how MNCs operate. Adjusting to local customs is not only about being familiar with company 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 company relationships are made on trust and individual connections instead of just being transactional. Furthermore, MNEs can benefit from adapting their human resource management to mirror the social profiles of regional workers, as factors influencing employee motivation and job satisfaction vary widely across cultures. This involves a change in mind-set and strategy from developing robust economic risk management tools to investing in social intelligence and regional expertise as specialists and lawyers such Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely suggest.

Regardless of the political instability and unfavourable fiscal conditions in a few areas of the Middle East, foreign direct investment (FDI) in the region and, especially, within the Arabian Gulf has been continuously increasing in the last two decades. The relevance of the Middle East and Gulf markets is growing for FDI, and the associated risk seems to be important. Yet, research on the risk perception of multinationals in the region is lacking in volume and quality, as specialists and solicitors like Louise Flanagan in Ras Al Khaimah may likely attest. Although different empirical studies have investigated the effect of risk on FDI, most analyses have largely been on political risk. Nonetheless, a fresh focus has come forth in current research, shining a spotlight on an often-ignored aspect namely cultural factors. In these revolutionary studies, the researchers noticed that companies and their management usually really brush aside the effect of cultural factors as a result of not enough knowledge regarding cultural variables. In reality, some empirical research reports have discovered that cultural differences lower the performance of multinational enterprises.

Much of the prevailing academic work on risk management strategies for multinational corporations demonstrates particular uncertainties but omits uncertainties that are difficult to quantify. Indeed, plenty of research within the international management field has been dedicated to the management of either political risk or foreign exchange uncertainties. Finance and insurance coverage literature emphasises the danger factors which is why hedging or insurance coverage instruments could be developed to mitigate or transfer a company's risk exposure. But, current studies have brought some fresh and interesting insights. They have sought to fill an element of the research gaps by giving empirical knowledge about the risk perception of Western multinational corporations and their administration techniques at the company level in the Middle East. In one research after gathering and analysing data from 49 major worldwide companies which are have extensive operations in the GCC countries, the authors found the following. Firstly, the risk connected with foreign investments is actually more multifaceted than the often examined variables of political risk and exchange rate exposure. Cultural danger is perceived as more essential than political risk, economic risk, and financial risk. Secondly, despite the fact that aspects of Arab culture are reported to really have a strong influence on the business environment, most firms battle to adapt to local routines and traditions.