Risk Management
Finance, Accounting, and Treasury Department Risk Management – A 360-Degree Approach
Ensuring Financial Stability, Compliance, and Risk Mitigation for Mega Construction Projects
1. Introduction
The Finance, Accounting, and Treasury Departments at BEC Arabia operate under a structured risk management framework to identify, mitigate, and control financial, operational, and compliance risks. Given the high financial exposure in mega construction projects, risk management ensures:
Financial stability and liquidity to support ongoing projects
Compliance with Saudi regulatory requirements, tax laws, and financial reporting standards
Mitigation of financial fraud, contract payment risks, and cost overruns
Protection against foreign exchange fluctuations, credit risks, and treasury mismanagement
Minimization of procurement and supplier payment risks
A 360-degree risk control strategy integrates:
Risk Identification & Classification – Assessing financial, regulatory, and operational risks
Risk Mitigation & Control – Implementing preventive strategies and financial safeguards
Regulatory & Compliance Risk Monitoring – Ensuring full adherence to Saudi financial laws and international standards
Digital Risk Tracking & Forecasting – Using ERP, financial risk models, and Power BI dashboards for real-time risk monitoring
This structured framework enables BEC Arabia to maintain financial integrity, mitigate risks, and ensure financial sustainability in all operations.
2. Risk Classification in Finance, Accounting, and Treasury
2.1 Key Risk Categories
Risk Type
Potential Threats
Impact Area
Mitigation Strategies
Financial Planning & Budget Risks
Cost overruns, inaccurate forecasts, underfunded projects
Budget control, cash flow stability
Implement real-time cost tracking & variance analysis
Liquidity & Cash Flow Risks
Insufficient liquidity, delayed receivables, cash shortages
Project execution, supplier payments
Maintain minimum liquidity reserves and secure bank credit lines
Contractual & Legal Risks
Contract breaches, disputes, delayed supplier payments
Legal compliance, financial liability
Ensure FIDIC contract compliance and legal contract reviews
Taxation & Regulatory Risks
Non-compliance with ZATCA VAT, tax penalties, delayed filings
Regulatory fines, financial audits
Conduct quarterly tax audits and implement automated tax tracking
Treasury & Banking Risks
Foreign exchange fluctuations, credit facility risks, investment losses
Banking relationships, financial stability
Use forex hedging strategies and maintain low debt-to-equity ratios
Procurement & Supplier Payment Risks
Supplier financial instability, fraudulent transactions, delayed payments
Procurement compliance, cost control
Implement supplier financial audits & Etimad procurement compliance
Benchmark: All high-risk financial transactions must be assessed and mitigated before contract execution.
3. Risk Identification & Assessment Strategies
3.1 Financial Risk Assessment Framework
Qualitative Risk Assessment – Identifies high-risk financial areas based on historical financial data and economic forecasts.
Quantitative Risk Modeling – Uses financial stress testing, cash flow forecasting, and variance analysis to measure financial exposure.
Risk Rating & Prioritization – Categorizes risks into low, medium, high, and critical impact levels based on potential financial damage.
Key Compliance Deliverables:
Quarterly Financial Risk Reports & Impact Assessments
Variance Analysis & Risk Forecasting Reports
Treasury Liquidity Stress Testing & Capital Allocation Reviews
Benchmark: 80% of financial risks must be proactively mitigated through preventive measures rather than reactive solutions.
4. Financial Risk Mitigation & Control Strategies
4.1 Budget Control & Cost Risk Mitigation
Implement real-time budget tracking using ERP financial dashboards.
Require approval from Finance for any budget deviations exceeding 5%.
Enforce strict budget review policies before approving any financial commitments.
Key Compliance Deliverables:
Monthly Budget Performance & Cost Control Reports
Financial Risk Deviation & Budget Adjustment Logs
Benchmark: Project cost deviations must not exceed 5% of approved budgets.
4.2 Cash Flow & Liquidity Risk Control
Maintain minimum liquidity reserves of 10% of annual revenue to cover operational expenses.
Implement supplier payment schedules aligned with project cash flow projections.
Secure bank credit lines and overdraft facilities as financial backup mechanisms.
Key Compliance Deliverables:
Liquidity Monitoring & Cash Flow Analysis Reports
Supplier Payment Scheduling & Receivables Tracking Logs
Benchmark: Ensure 100% on-time payment of financial commitments.
4.3 Treasury & Banking Risk Management
Use forex hedging techniques to reduce financial exposure to currency fluctuations.
Maintain low debt-to-equity ratios to minimize financial risk exposure.
Ensure all financial transactions comply with Saudi Central Bank (SAMA) banking regulations.
Key Compliance Deliverables:
Treasury Risk Assessments & Foreign Exchange Hedging Reports
Banking Compliance & Financial Stability Logs
Benchmark: Reduce treasury risk exposure by at least 20% annually.
5. Regulatory & Compliance Risk Control
5.1 Taxation & ZATCA Compliance Risk Management
Conduct quarterly tax audits to prevent VAT miscalculations and ensure compliance with Saudi tax laws.
Automate tax filing and VAT reporting to avoid regulatory penalties.
Ensure that all tax payments are processed before ZATCA deadlines to prevent fines.
Key Compliance Deliverables:
Quarterly VAT Compliance & Tax Filing Reports
ZATCA E-Invoicing Compliance Audits
Benchmark: 100% accuracy in VAT compliance and zero regulatory penalties.
5.2 Procurement & Supplier Payment Risk Management
Conduct financial audits of suppliers before approving contracts.
Ensure all procurement transactions follow Etimad E-Procurement System regulations.
Require finance department approval for all supplier payments above SAR 500,000.
Key Compliance Deliverables:
Supplier Financial Risk Assessments & Procurement Compliance Reports
Procurement Audit Logs & Contract Payment Compliance Reports
Benchmark: Zero unauthorized supplier payments or procurement financial violations.
6. Digital Risk Monitoring & Financial Analytics
6.1 Integration of Financial Risk Monitoring Systems
Technology
Functionality
Application in Risk Management
ERP System
Budget Control, Financial Reporting, Cost Tracking
Ensures real-time risk monitoring & financial compliance
Aconex
Contract & Payment Risk Management
Tracks financial risks in contract administration & supplier payments
Power BI Dashboards
Financial Risk Forecasting & Compliance Analytics
Provides real-time risk assessments & variance analysis
Banking & Treasury Systems
Liquidity Risk Management & Foreign Exchange Hedging
Reduces financial exposure in banking transactions
Benchmark: 100% of financial transactions and risks must be digitally tracked and managed.
7. Conclusion
The Finance, Accounting, and Treasury Departments at BEC Arabia ensure:
Proactive risk management strategies for financial sustainability.
Full compliance with Saudi tax laws, IFRS accounting standards, and banking regulations.
Optimized treasury and liquidity management to prevent financial instability.
Structured budget control, cost risk mitigation, and fraud prevention mechanisms.
Digital risk tracking to monitor financial exposure in real-time.
By integrating financial risk management frameworks, regulatory compliance controls, and treasury safeguards, BEC Arabia ensures financial resilience, regulatory adherence, and operational excellence in all financial functions.
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