Yemen’s Financial Institutions Face Risk Assessment Challenges: New Report Highlights Vulnerability to Shocks

Cairo, July 2023 - A Wake-Up Call for Policymakers

A new report by the Economic and Social Commission for Western Asia (ESCWA) has sounded a warning about the vulnerabilities of Yemen’s financial institutions to shocks. The report, titled “Risk Assessment in Yemen: An ESCWA Arab Risk Monitor Analysis,” presents a comprehensive assessment of multiple risks in Yemen, highlighting the need for policymakers and stakeholders to integrate risk analysis into their decision-making processes.

Overview of the Report

The report assesses the overall risk in Yemen, which has increased significantly over the past decade. The country’s vulnerability is influenced by water scarcity, food insecurity, corruption, insufficient social protection, and ineffective governance, creating a vicious cycle of instability.

Key Findings

• Yemen’s financial institutions face significant challenges in assessing and managing risk due to weak regulatory frameworks, inadequate supervision, and limited access to credit.
• The country’s dependence on imported goods, high levels of debt, and lack of diversification in its economy exacerbate the vulnerability of financial institutions.
• Climate change has had a marked impact on Yemen, with a tenfold increase in human impact from natural disasters.

Recommendations for Policymakers

The report recommends that policymakers:

• Prioritize strengthening regulatory frameworks for financial institutions
• Enhance supervision and oversight to ensure stability
• Increase access to credit for small and medium-sized enterprises (SMEs)
• Address corruption, improve governance, and promote transparency
• Create an enabling environment that supports the growth of financial institutions

Conclusion

The report concludes that by integrating risk assessment into policymaking and planning, policymakers can guide national and regional efforts to build a more resilient economy. The Sustainable Development Goals (SDGs) provide a framework for addressing the complex challenges facing Yemen.

Expert Insights

“The SDGs provide a framework for addressing the complex challenges facing Yemen,” said [Name], an ESCWA expert who contributed to the report. “By integrating risk assessment into their decision-making processes, policymakers can help build a more resilient economy that is better equipped to withstand shocks.”

Next Steps

The report is part of a series of publications by ESCWA aimed at providing policymakers with practical guidance on how to assess and manage risk in the Arab region.