Risk Assessment for Business in Dubai: Business in the UAE

11:35 pm  |  20.03.2024

Today, we would like to share with you our thoughts and experiences on a topic that often remains in the shadows when discussing business strategies – risk assessment in businesses in the Emirates.

Dubai, as a city-state, provides unique opportunities for entrepreneurs. However, like any other place, there are risks.

Initial Risk Assessment: Action Plan

You are faced with an important decision – there is a successful business opportunity here in Dubai. But how can you avoid missing potential risks? The initial risk assessment includes a strategic analysis of the economic environment, legal system, competition, and consumer demand. The action plan begins with a thorough study of international and domestic markets and identifying potential threats.

Dubai has a progressive business climate, but every businessman needs to carefully study the legal aspects and regulations. It is important to understand Arab laws regarding business ownership, taxation, and labor relations.

Potential Risks for Investors in Dubai

The first potential risk of investing in Dubai is the volatility of the UAE currency, the dirham. Because the dirham is directly pegged to US currency, it may be vulnerable to fluctuations in the dollar exchange rate. 

Jurisdiction risk is another potential risk when investing in Dubai. The laws here are different from many other countries. So, when it comes to access to capital or return of funds, there are certain risks associated with legal restrictions.

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The bureaucratic environment in Dubai poses another potential problem for savers. This may include a lengthy process to obtain the necessary licenses or permits to operate a business, as well as difficulties interacting with government agencies. At the same time, the government of the UAE and Dubai, in particular, regularly makes changes to procedures and legislation to ensure a smoother process of opening a company here or buying real estate.

The good news is that there are virtually no political risks in the UAE. Even though the country is divided into seven emirates, it has maintained political stability for many decades. Moreover, the UAE maintains a neutral position in external political conflicts and sanctions restrictions in relation to other countries.


Any business involves risks, and entering the Middle East market only increases them.

The language barrier: This aspect can become a problem for some non-English speakers. All employees are required to have a minimum of perfect English, but please note that the only official language in the UAE is MSA (Modern Standard Arabic). It is where paperwork in government agencies and judicial proceedings are conducted. In everyday life, residents of the Emirates speak dialects of Arabic.

It is the employer’s responsibility to issue resident visas to foreign employees. For each position, you will have to prove to the authorities that it is impossible to hire a local specialist.

When developing advertising and information materials, consultation with local experts will be required so as not to accidentally violate cultural and religious rules.

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A need to carefully choose a business niche without following stereotypes. For example, despite the demand for IT services, competition in this area is very high, and a small company can count on a net monthly profit of $8,000, which is simply not serious for the UAE.

At least $50,000 will be spent on company registration and business licensing, rent of premises, utility bills and other mandatory expenses, and resident visas for foreign employees ($2000 for each visa).

Despite all the innovative solutions in the field of climate control, in the summer life in the UAE becomes even slower, and the flow of tourists drops to almost zero.

And don’t forget that Eastern exoticism, so attractive on vacation, can put pressure on a person with a Western mentality when doing business.

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Of course, when investing in Dubai assets, investors must analyze to understand the risks and complexities associated with investing abroad.

However, due to its attractive tax-free structure and the absence of restrictions on the repatriation of profits, Dubai has a consistently successful track record of attracting foreign direct investment. The emirate is considered the preferred global foreign direct investment destination for more than 70% of Fortune 500 companies and new economy entrepreneurs, according to Dubai FDI.

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