The investment decision-making process from a risk manager’s perspective: a survey

Abstract

Purpose: The purpose of this paper is to identify associations between various inputs in the investment decision process of Saudi Arabian risk managers (RMs). Design/methodology/approach: The paper reports the views of 81 RMs in Saudi Arabia regarding their approach to investment risk and uses these as inputs into conditional independence graphs. Findings: Saudi RMs favour their experience and personal judgment over mathematical projections and statistical models when considering investment risk. A need remains for an efficient risk-modeling framework for the banking system that has more practical value than those which have emerged to date. Originality/value: The paper provides novel insights on issues such as the extent to which risk management is dealt with in practice via personal experience rather than statistical-based projections. The findings also shed light on the level of satisfaction amongst RMs and regulators with the incentives provided in the Saudi Arabian environment and the importance placed on guidance from the nation’s leading regulatory institution. © 2024 Elsevier B.V. All rights reserved.