Operational Risk in Telecommunications Sector in Kuwait (Essay Sample)

Student’s Name Instructor’s Name Course Date Operational Risk in Telecommunications Sector in Kuwait Kuwait is one of the Gulf Cooperation Council (GCC) countries is considered to have a fast developing market enhancing importation of telecommunication related services. This is as a result of the good economic conditions, increased budget surplus, a well-structured infrastructure and development activities which are carried out via government plans and actual spending. Sometimes back, the governments of the countries in the GCC have raised their spending requirements in the fields which are service-related including the banking, telecom, and others (www.infomercatiesteri.it). The budget has been raised for implied support to local industries which are in dire need of these services and also for the economic focus whereby they intend to diversify from hydrocarbon revenue sources which are considered to be the primary contributor of the budget surplus. There are various foreign telecommunications and software developments companies which can be considered successful in marketing their services in the whole of the region. They have merged with the local governments and companies to initiate development in the current structure and networks in the telecom industry. The field where more collaboration has been noted includes software development and SAP services, health infrastructure and services, wireless connectivity and others. The telecom industry is broken down into the internet and online services, fixed line voices and wireless communication services. It is a capital intensive industry which requires substantial capital expenditure and rigorous processes for an establishment. Being a capital-intensive investment, there are various risks involved before and after its establishment. Some of these risks range from labor market risks, logistic risks, trade, investment risks, crime and security risks. These risks hinder operations in the telecommunication industry thus reducing efficiency. Below is an outline of some of the main challenges which are currently facing the telecommunication industry in Kuwait; Regulations and Policy Making One of the main factors which have hindered growth of the telecommunication sectors in Kuwait is coming up with a transparent and effective regulatory environment. During the Connect Arab Summit, their following report indicated that regulation and policymaking was a problem in the Arab states including Kuwait. The report indicated that Arabs states lacked a flexible environment with more freedom which hindered easier access and adoption of technologies among different users in the above states. Lack of flexibility has hindered operations and made Kuwait telecommunication industries such as Zain experience stiff competition from other industries which they are not able to withstand. Governments’ Control Developing a fully working regulatory framework in Kuwait has been noted to be slower when compared to other markets. More so, the market competitiveness is also slower because of the major government control of various sectors. Generally, the regulatory framework in the country is highly varied and regulatory authorities are present. However, despite their presence, the development of telecommunication law and policies is facilitated by the sector’s ministry which causes inconsistency. In most cases, the role of the regulator is overridden by the ministry concerned which often disturbs the balance in the market and turn leads to unfair competition. Competition In Kuwait, the government tends to rule the regulatory bodies, and it is a major shareholder in the telecom industry. In this regard, the government tends to be one of the largest telecom operators, and this reduces competition, hence disadvantaging customers. The number of mobile operators in the country is few, not enough to create fair competition in the market. Lack of competition results to high mobile tariffs and reduction of a wider variety of options; it has hindered companies to strive and provide lower prices and enhance their services, this service delivery is poor when compared to other countries. Licensing and Spectrum Band Allocation In the Arab Gulf Countries, a high proportion of the spectrum is currently being provided as compared to other regions in the world. An approximate 700 MHZ spectrum has been provided to the mobile services (White 30). However, if more different mobile services will be used, there is a need for an increased spectrum. Most of the Arab countries are currently being affected by the problem of lack of spectrum band harmonization. Thus, they lack vital benefits, especially in decreasing prices. Spectrum band harmonization has not been implemented hence affecting the entire Gulf region including Kuwait. Lack of this harmonization has resulted to ineffectiveness in the use of mobile phone services, and applications are not effective. As discussed above, there are various risks within the telecommunication sector in Kuwait which are affecting the consumers. The low level of regulation which has been the major issue is forcing the private investors to seek for a more structured market noting that the sector is capital intensive. There have been fixed line services which have led to a negative impact on both innovation and growth. Another risk in the industry include; the risk of consolidating data from various internal systems, third-party content providers, departments, and third-party software providers. Another observed risk is that managing the enterprise risk within infrastructures which are enormous, providing satisfaction to multiple regulatory bodies that have their specific requirements in both a consistent and a regular manner (dcvizcayno.wordpress.com). There are risks of utilizing the traditional castles and moat approach to IT security which currently is considered to offer insufficient protection for confidential customer and company information. Companies in the telecommunication sector are at risk of sustaining the risk and compliance program which are on an on-going basis. Mitigating the Risks Based on the above-mentioned types of risks, it is important for the sector to come with ways of mitigating these risks to enhance efficiency in the sector; below are some of the factors which if applied will enhance efficiency; The telecommunication sector is required to adopt various frameworks and regulation such as the ISO 2700011 and others. These frameworks have various advantages such as giving the enterprise a chance to benchmark against competitors and provides to them and their customers with relevant information that pertains the IT security. It also enables the management to demonstrate its due diligence (Osabutey et al 420). These frameworks foster efficient security cost management, comfortable level of interoperability, compliance with laws and regulations as a result of the common set of guidelines which they offer. All the involved bodies are required to come together and establish a resilient government, risk, and compliance business process which will provide a comprehensive real-time view of risks and compliance in the whole enterprise to both vendors and partners. The regulatory bodies are required to develop a method which they will use to execute the cost-effective audits. It is important to have bodies carrying out audit ...