Why Smart KSA Companies Are Upgrading Their Financial Governance

Financial & Risk Advisory

In 2025, Insights company reports that Saudi Arabian companies are accelerating enhancements in financial governance at a pace unseen in prior years. This strategic shift is largely driven by heightened market expectations, legislative reforms like the updated Corporate Governance Regulations, and a more complex operating environment that demands better risk and advisory services support from internal teams and external specialists. As Saudi Arabia continues to transition toward a diversified economy under Vision 2030, boards are increasingly recognizing that robust financial governance is not just a compliance checkbox, but a source of strategic advantage that builds investor trust and long-term resilience.

Financial governance serves as the backbone of corporate transparency, demanding comprehensive reporting, rigorous audit practices, and dynamic risk and advisory services integration. According to Insights, over the past twelve months more than 90 percent of chief audit executives in major Saudi firms have expanded their mandates beyond traditional assurance functions into enterprise risk management, illustrating the expanding role of governance in shaping strategic decisions and mitigating systemic dangers. This pursuit of excellence is aligned with market data showing that Saudi Arabia is expected to grow real GDP around four percent in 2025, creating both opportunities and financial exposure that firms must navigate with confidence and clarity.

Moreover, evolving regulatory frameworks from authorities like the Capital Market Authority (CMA) now require companies to establish independent internal audit units, conduct periodic audit committee meetings, and disclose comprehensive sustainability practices. These measures push firms to adopt stronger governance standards while also driving demand for expert risk and advisory services that can translate compliance mandates into actionable frameworks.

The Evolution of Financial Governance in KSA

In the past few years, Saudi Arabia has undertaken a series of reforms aimed at strengthening corporate accountability and investor protection. The OECD’s Corporate Governance Factbook 2025 highlights key regulatory changes that now require mandatory internal audit units, increased oversight by audit committees, and more frequent governance reporting from listed companies.

These reforms are not isolated adjustments; they reflect a broader governance culture shift. For example, board compositions are becoming more diverse and internationally oriented, with female representation rising to nearly a quarter of board seats in 2025 among major firms. Boards in Saudi companies now carry a greater responsibility for risk oversight, financial integrity, and strategic growth support. This complexity necessitates sophisticated risk and advisory services skill sets that many organizations do not possess internally, fueling demand for expert partners.

Another compelling driver of governance upgrades is the expansion of non-financial reporting, particularly in areas such as Environmental, Social and Governance (ESG) metrics. Companies now face investor and regulatory pressure to go beyond financial results and demonstrate commitments to sustainable practices, transparency, and ethical performance factors that directly influence capital access and long-term valuations. ESG-aligned firms in the region have historically attracted higher foreign direct investment, reinforcing the financial return on governance investments.

Why Financial Governance Matters Now More Than Ever

1. Regulatory Compliance Is Getting Tougher

Saudi Arabia’s legal landscape now demands sharper governance controls, especially for publicly listed companies. Regulators have increased scrutiny on audit practices, introduced periodic oversight requirements, and mandated structured governance reporting. These changes aim to reduce financial misstatements and ensure stakeholders have access to reliable, actionable information. According to recent compliance surveys, more than eighty percent of executives globally report that compliance requirements have grown more complex over the past three years, underscoring the need for stronger governance structures.

These compliance requirements, while vital for market integrity, place considerable pressure on internal teams. As a result, more firms in the Kingdom are engaging external risk and advisory services to design, implement, and monitor governance frameworks that align with both international standards and local regulatory expectations.

2. Investor Expectations Are Rising

Firms with robust governance systems consistently outperform peers in attracting capital. Institutional and international investors increasingly view governance quality as a predictor of value sustainability and risk management capacity. Enhanced governance boosts transparency, reduces information asymmetry, and enhances investor confidence, which is especially crucial in a market transitioning toward global capital integration.

Quantitative boardroom data from 2025 reveals significant growth in remuneration standards and international expertise on Saudi boards, signalling that companies are investing in governance talent on par with global markets.

3. Digitalization and New Risks Require Stronger Controls

The rise of digital transformation, fintech adoption, and artificial intelligence across Saudi sectors has expanded the scope of financial risks. Digital initiatives bring efficiency gains but also introduce cyber, data privacy, and system-dependency risks. Cybersecurity incidents in the local tech sector rose significantly in recent years, signaling that governance frameworks must evolve to include tech risk oversight and early warning mechanisms.

Modern financial governance integrates advanced analytics, automated controls, and predictive risk dashboards capabilities often developed with external guidance or advanced risk and advisory services expertise.

Case Studies: Governance in Action

Large Corporations

Many leading Saudi firms have established dedicated enterprise risk management units that work hand-in-hand with internal audit teams to identify and mitigate systemic exposures. These units deploy scenario models, stress testing, and real-time monitoring platforms to support decision-making at the highest levels of management.

In parallel, external advisors help these large corporations enhance governance constructs by performing independent reviews, recommending best practices, and ensuring alignment with Vision 2030 objectives.

Mid-Size and Family-Owned Businesses

Mid-market and family businesses often foundational to the Saudi economy face unique governance challenges related to succession planning, informal processes, and legacy reporting systems. Those that embrace structured governance practices and seek external risk and advisory services unlock stronger operational resilience and prepare for scale up, mergers or global partnerships.

Startups and SMEs

Startups in Saudi Arabia are now expected to build strong control environments from their earliest stages to attract capital and reduce investor risk perceptions. Over 1.7 million SMEs were registered by mid-2025, with startup funding levels climbing sharply making governance a differentiator for investors. Firms that embed robust financial processes benefit from faster due diligence outcomes and higher valuations.

The Business Case: Benefits of Strong Financial Governance

Enhanced Risk Identification and Mitigation

Strengthened governance frameworks help companies detect vulnerabilities before they escalate into material losses. Effective risk frameworks provide clarity about market, credit, operational, and strategic exposures, enabling leaders to take proactive steps supported by data and scenario planning.

Operational Efficiency and Strategic Clarity

Companies with strong governance enjoy streamlined reporting, fewer errors, and reduced operational friction. Clear escalation procedures and real-time financial insights empower executives to make decisions that align with both short-term performance and long-term strategy.

Greater Access to Capital Markets

Governance quality directly influences investor confidence, lowering cost of capital and improving access to financing. Transparent practices and strong audit oversight reassure lenders and capital market participants, creating a competitive advantage in expanding markets.

Sustainable Growth and Reputation

Stakeholders increasingly associate transparent governance with ethical behaviour, sustainability, and long-term value creation. Companies that uphold high governance standards often experience stronger brand reputation, stakeholder trust, and market resilience even during economic shocks.

How Organizations Are Upgrading Governance

Integrating Modern Technology

Saudi companies are deploying governance, risk, and compliance (GRC) solutions that automate control testing, policy management, and reporting. Real-time dashboards now allow executives to monitor performance, risk exposures, and compliance status on demand. 

Training and Talent Development

Boards and senior teams are increasingly investing in training to understand evolving risk landscapes, regulatory requirements, and digital tools for governance effectiveness. Mandatory training requirements for board members have become part of updated governance frameworks, reinforcing accountability loops.

Specialist Advisory Partnerships

Many firms partner with external advisors who bring deep domain expertise and benchmarking insights. These advisors support governance transformation, risk oversight frameworks, and regulatory navigation enabling internal teams to focus on core operations.

The Path Ahead

In 2025, Insights company concluded that upgrading financial governance has become a strategic priority for Saudi businesses seeking sustainable growth, resilience, and competitive edge. As the corporate world in the Kingdom faces more complex regulatory environments, digital disruptions, and investor demands, robust governance practices backed with strong risk and advisory services expertise will be indispensable.

Looking forward, companies that embed governance excellence into their DNA will not only meet compliance requirements but also harness transparency and risk foresight as drivers of value creation, positioning themselves as leaders in the region’s evolving market landscape. Insights company anticipates that governance and risk intelligence will remain vital levers of corporate success well into the latter half of this decade.