The Banking Executive Magazine - September 2025 Issue

Rethinking Risk and Strategy paralysis. When the sheer volume of available information overwhelms, the temptation is to defer decisions, cling to familiar models, or assume that conditions will revert to past pat- terns. But as history repeatedly demonstrates, inaction is itself a de- cision—often with consequences as severe as the wrong course of action. In the Arab world, this dilemma is particularly visible in the banking sector, where balance sheets exceed- ing five trillion US dollars represent not just financial assets but also the collective trust of societies and gov- ernments. The stakes are high: poor judgment can lead to misallocations of capital, weaken financial stability, and exacerbate systemic risks. At a time when regional economies are diversifying, pursuing ambitious de- velopment visions, and expanding their global roles, banks must ensure that their decision-making frame- works are robust enough to support these objectives. FRAMING THE PROBLEM CORRECTLY Effective decision-making begins with framing the problem in the clearest possible terms. For corpora- tions, this may mean maximizing shareholder value or ensuring sus- tainable profitability. For policymak- ers, it could mean safeguarding financial stability, raising living stan- dards, or supporting growth through inclusive credit channels. In either case, clarity of purpose is essential. Without a defined overarching goal, decision-making becomes reactive, guided by immediate pressures rather than long-term strategy. For Arab banks, this clarity must encompass not only profitability but also broader responsibilities to national economies. Central banks, regulators, and policymakers in- creasingly expect banks to support fi- nancial inclusion, align with climate and sustainability agendas, and en- sure compliance with global stan- dards. Defining these objectives early and explicitly allows institu- tions to focus on areas where they exercise actual control—deployment of resources, cost priorities, or strate- gic expansion into new regions and sectors. RECOGNIZING CHANGING DYNAMICS Beyond framing, decision-makers must remain attuned to the dynamics shaping their operating conditions. The COVID-19 pandemic was a stark lesson in this regard. What ini- tially appeared as a contained health challenge evolved into a multi-di- mensional crisis, affecting public health, economic activity, education, and social cohesion. More than five years later, its consequences remain evident: elevated government debt burdens, higher levels of mental health challenges, and disrupted ed- ucational outcomes that will affect labor markets for decades. Similarly, the trend toward deglobal- ization has redrawn the landscape for business. The assumptions that defined the globalized economy— free flows of goods, capital, and tal- ent, underpinned by multilateral governance—are steadily eroding. For corporations and banks accus- tomed to operating in interconnected markets, this shift demands a re- assessment of established models. The ability to hire international tal- ent, maintain global procurement ISSUE 201 SEPTEMBER 2025 the BANKING EXECUTIVE 41