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Managing the risks associated with the cyber city project-case study of the
NEOM Project

Conference Paper · April 2018

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 Managing the risks associated with the cyber city project -
case study of the NEOM Project

Benjamin Grab, Bucharest University of Economic Studies, Romania,

[email protected]
Wiebke Geldmacher, Bucharest University of Economic Studies, Romania,
[email protected]
Razvan Ionescu, Bucharest University of Economic Studies, Romania,
[email protected]

Abstract
This paper highlights the main elements of a doctoral research regarding risk mitigation and business
management decision-making conducted by authors in the Research Centre of Business
Administration, Bucharest University of Economic Studies. The main objective is to identify the
main threats affecting plans for the implementation of the cyber city project Neom in Saudi Arabia.
Therefore, assessing the external risk-related issues to be managed by the responsible project
managers. The first part of the paper provides an overview about the chosen analysis framework,
while research results and recommendations form the second part.

This paper is founded on extensive review of existing literature from professional associations and
recognized publisher. Hence, a total of 50 publications and data sets were assessed to provide for an
holistic overview of the risks and opportunities associated with the prestigious and ambitious project
along political, economic, social, technological, environmental and legal lines.

Our joint research highlights that the key management challenges of the project are based on three
key components requiring particular management attention going forward. These include the current
insecurity regarding the funding side of the project, the necessity for implementing a working
prototype given the early stage of most technological advancements to be featured, as well as the
requirement for properly moderating and managing the change process in Saudi Arabia. In this
context, the country represents a challenging market environment for the project, while high
disposable incomes and the need for non-oil sector growth promise high rewards for finding the right
strategies going forward.

Keywords: Risk Management, Smart City, NEOM project, Innovation, Strategic Management,
Project Management

1
Introduction
Saudi Arabia is one of the richest countries on the planet. Culturally, it is the host of the two most
holy sights for all Muslims around the globe, Mekka and Medina which draws millions of visitors
every year as part of the annual pilgrimage called Hajj. Economically, the regional powerhouse
strongly depends on an sheer endless reservoir of crude oil hidden below the wide sandy landscapes
of the country. However, it is this dependency on its main commodity that raised concerns over the
financial sustainability of the Kingdom. With the oil price going down since 2014, the pressure on
Saudi Arabia’s budget has become more obvious. (Carey, Nereim, Cannon 2017; Nereim, Shahine
2017)

The old growth and development trajectory has reached its limits, therefore the rulers of the country
aim to formulate a new strategy for the country. The main pillars were introduced, as part of Saudi
Arabia’s Vision 2030, in 2016. They range from projects addressing the diversification of the local
economy, developing the public service sector and showcasing the countries’ rich cultural heritage
through tourism and hospitality. However, real headlines were only made 18 months later with the
presentation of project Neom - a new type of special economic zone connecting the Sinai peninsula
with the Saudi mainland. Given the ambitious and ground-breaking nature of the venture - from fully
automated processes, complete dependency on solar and wind energy, heavy use of robotics
technology, a new set of legislations and many more cutting-edge features, this paper assesses the
strategic risks associated with the project based on the existing information. In some cases, the risks
can be mitigated if they are addressed starting from the design phase of the project which is the case
given the early stage of the project. (Carey, Nereim, Cannon 2017; Olaru et al. 2017; Hohan et al.
2017).

The first part of this paper sets the theoretical framework in regard to the analysis of strategic risk
parameters outlined in the P.E.S.T.E.L. framework The research contribution consists of an in-depth
analysis of the individual strategic risk elements potentially influencing on Project Neom. In addition
to the assessment of each element, suggestions concerning feasible mitigation strategies are added.
The last part of this paper includes a conclusion of the results as well as recommendations for the
concept and implementation phase of the project.

Research Methodology

The paper is the result of the early stage of PhD research on strategic management. Given that the
overall plan is still in an early stage, this research paper is founded on an extensive review of existing
literature from professional associations and recognized publishers and interviews with high -level
market participants. In this context, a total of 50 data sets and publications were analyzed to draw the
big picture on the strategic risk assessment of the project within the framework of the current
developments in Saudi Arabia. In essence, the assessment focuses on both the existing challenges and
opportunities of Project Neom by analyzing the essential political, economic, social, technological,
ecological as well as the legal issues. In this light, the paper establishes a link between the detected
root causes and recommendations for addressing these challenges going forward.

Theoretical Framework

Project Neom is still in a very early planning phase, therefore the degree of analysis conducted on the
subject matter is fairly limited. Hence, in the absence of structured and holistic research, this paper
aims to bring information from a diverse set of information together with the aim of assessing the
existing factors impacting on the project.

The obtained information and data do provide for a strong basis allowing the extraction of risk
indicators. In order to take a structured approach, the external environment shall be screened in a
compartmentalized fashion. In this light, scanning and analyzing the market environment enables
projects to structure, monitor and evaluate data concerning the individual local characteristics and
define winning strategies while reducing risks associated with their business activities. In order to

2
manage the risks of the NEOM project, it is essential to identify first the context in which this project
exists (Ionescu et al. 2018).

When it comes to influencing factors defining the fabric of the market environment, projects may find
it difficult to shield themselves from social customs, political sentiment or climate-related issues.
Against this background, it is paramount to follow any such trends closely while at the same adopting
and implementing mitigating or exploiting strategies. Only if companies or projects manage to deploy
their internal capabilities are they able to reap the benefits of existing opportunities. At the same time,
comprehensive knowledge of the external environment allows market participants to detect, structure,
analyze and monitor potential risks for their business activities. Therefore, a through understanding of
internal capabilities and the external environment brings companies closer to adopting the right
strategies, while reaching their overall business targets (Galbraith & Kazanjian 1986; Wheelen &
Hunger 2002; Mellahi et al. 2011).

Fig 1. P.E.S.T.E.L. analysis (Wheelen & Hunger 2002)

As highlighted in figure 1, the P.E.S.T.E.L. analysis is a straightforward and versatile tool to structure
the market environment of any given country or region. In its chosen form, it addresses the following
business perspectives: political, economic, social-cultural, technological, environmental and legal.
Given the flexible nature of the model, the chosen segmentation may differ in accordance with the
requirements of the market assessment. In this regard, additional dimensions may be added or
deducted. Other versions therefore exist with a stronger focus on religious, demographic or financial
aspects. (Mellahi et al. 2011).

Given its chosen form, the P.E.S.T.E.L. analysis enables the segmentation of the often complex and
chaotic external environment with the help of the chosen business perspectives. Through the
processing of key data and information, key trends and developments are made visible which allows
firms to adopt the right business strategies to address risks and to safeguard future success. In this
context, the tool shall be regarded as a broad framework to highlight and underline the key factors
impacting on the market environment and its underlying root causes. Therefore it may work as a
checklist to assess how individual issues affect operations in selected countries or regions. (Wheelen
& Hunger 2002; Mellahi et al. 2011).

The six segments each focus on a crucial variables. By combining these elements, it is both possible
to derive the big picture of the market environment as well individual key risk components requiring
particular management attention in the the context of Project Neom:

3
The political segment may address the broad nature of the local distribution of power. In the context
of Saudi Arabia, this includes the superior role of the ruling monarchy. Furthermore, the countries
involvement in regional and international issues should be thoroughly assessed in this matter. Given
the size of the project and its connection to friendly as well as hostile government, it requires
particular attention. In addition to that the degree of political stability, the involvement and
inclusiveness of the political system as well as the exercised balance of power may impact on the
operating environment of the market environment in Saudi Arabia – in particular against the
background of sudden and deep changes affecting most parts of the population. (Mellahi et al. 2011;
Korybko 2017; Nereim, Shahine 2017)

The focus on basic financial fundamentals and growth drivers is at the heart of the economic
segment. The general development trajectory as stipulated through economic p olicies or external
factors of influence does impact significantly on Project Neom. Given the countries` strong
dependency on oil and other natural ressources, in combination with elevated investment
requirements in other developing sectors of the economy, this threat will be a central role for the
overall analysis. (White 2004; Wald 2017)

With reference to the social-cultural segment, existing short and long-term factors need to be
considered with the aim of conducting an inclusive assessment. Main characteristics of a given
society in the form of behaviors and practices, which can be considered the most visible signs of
culture, play a substantial role for the analysis. For Project Neom, the focus will be the challenges
posed by human-human relations as well as human-robot relations. Since the influx of foreign experts
and the wide-spread use of robots impact on the local social fabric. (Hall 1976; Wheelen & Hunger
2002; White 2004; Mellahi et al. 2011)

The role of the technological segment has received much attention given the challenges and
opportunities posed by the digitization of the economy. Companies and projects are alert with regards
to the rise of more digital and knowledge-driven economies. Since the adoption of technologies is
associated with great risks and benefits, the detection of promising trends can be considered a
competitive advantage for firms in all business sectors. Given the perceived status of Project Neom as
a smart city, the emphasis on cutting-edge technology will play a key role for the success of the
endeavour. Technology has the potential to drive real innovation and to break existing market barriers
shielding long-standing champions from new competition, the first mover approach taken by the
project team however comes at higher risks.(Wheelen & Hunger 2002; White 2004; Mellahi et al.
2011; Dickinson 2017)

The environmental segment includes a broad set of topics which are partly beyond the sphere of
influence of projects operating in a given market. This may include topics such as topography,
climate or population. Against this background, project require sophisticated risk management
systems, in order to mitigate any potentially harmful effects on their business. For Project Neom, the
currently available information paint a picture that sees the use of new technology to migitate the
human imprint, in terms of energy, water or waste treatment. (Wheelen & Hunger 2002; Mellahi et
al. 2011; Mairs 2017)

Considering the legal segment, the history, evolution and system of law have a significant impact on
the social fabric of any given country. Hence, they require a screening with regards to potential
impact on the project, along with the role and authority of existing institutions which are involved in
legal matters. In addition to the structure of the legal system, the question of substance, power and
capability plays a substantial role for the overall assessment. Given the status as a economic free zone
and the implementation of a more liberal set of rules and laws, the impact on the social fabric of the
conservative kingdom requires particular attention (Wheelen & Hunger 2002; White 2004; Mellahi et
al. 2011; Dickinson 2017; Mairs 2017)

Research Contribution

4
1. Political implications
Saudi Arabia is of geopolitical significance given its status as one of the largest oil exporting
countries as well as being the host to the two holy places Mekka and Medina. Given the current
position of Saudi Arabia in the global political landscape and its potential effects on project Neom,
the political assessment is divided into two categories: external influence and internal influence

1.1. External influence

With regards to the countries role in the region, the project may face substantial headwind from
regional competitors. Saudi Arabia currently seeks to claim its leadership role across the Muslim
world through religious means (in the form of promoting the strict form of Islam called Wahhabism),
petrodollars (through trade of all types and forms) or warfare (as in the sorry case of Yemen, where
the Kingdom fights Shiite-rebels alongside the Sunni government). In the process of increasing its
sphere of influence, Saudi Arabia continuously faces opposition from other regional parties. Of the
three notable stakeholders (Israel, Iran and ISIS), the former is likely to cause the least headache.
While both countries have been at loggerheads for many decades, Saudi Arabia’s Egyptian and
Jordanian Neom partners have already recognized and signed peace treaties with Israel, and Riyadh is
known to be coordinating with Tel Aviv in crafting a comprehensive anti-Iranian regional policy,
amongst other strategic commonalities that they share. Therefore the risk of Israel negatively
impacting the project is very low. On the other hand, Iran and ISIS could have a stronger interest in
pushing back Saudi Arabia’s ambitions. Iran, home of a Shiite population, is hostile towards the
vision of the Sunni-Muslim kingdom expanding its sphere of influence in the region. Given that the
two countries are already involved in various second-team conflicts in the Middle East (Yemen, Syria,
Lebanon and partly Qatar), the risk of Iran trying to sabotage the cyber city project can be perceived
as high. A similar verdict has to be made concerning the ongoing operations of ISIS in parts of the
Egyptian Sinai peninsula, which are supposed to be integrated in the wider Neom considerations.
Given that ongoing armed conflict in parts of the project region may cause substantial problems for
its feasibility, the risk arising from ISIS needs to be addressed by the project planners in Saudi Arabia.
(Korybko 2017; Nereim, Shahine 2017; Nonneman 2017; Williams 2017)

In both cases, Iran and ISIS, mitigation strategies have to involve well-coordinated attempts of
hampering any negative influence. This may include measures such as intensifying partnerships in
the region to push back the grip of hostile parties on Neom or at least in the case of Iran, a pragmatic
invitation to join this regional initiative for development. Given the current circumstances, the later
appears to be unlikely at this point. (Korybko 2017; Nereim, Shahine 2017; Williams 2017)

1.2. Internal influence

The change process triggered by Crown Prince Mohammed Bin Salman is meant to shake the very
foundation of the Saudi society. The scope and depth of it can be best derived from a statement made
by the local media alongside the Future Investment Initiative in Riyadh in October 2017. In previous
cycles of power, there was a distinct balance of power between liberal and conservative forces in the
country. These times are likely to come to an end under the new leadership. (Al Arabiyah 2017;
Carey, Nereim, Cannon 2017; Dickinson 2017)

During the event, the future ruler of Saudi Arabia spoke openly about leading his country back to
“moderate Islam”, highlighting that economic reforms are supposed to go hand-in-hand with plans
for political reform to steer the country away from the strict rule of Wahhabism. The prince's pledge
is a challenge to Saudi's conservative clerics and might be just a warm-up for future power struggle
between reformist and traditional powers in the country. While plans of the Crown Prince have been
well received by many liberal leaders around the globe, various analysts and scholars have raised
their concerns about his ability to push through the foreseen groundbreaking economic and political
changes. (Dickinson 2017)

In a first stand-off towards the beginning of 2017, the rulers scrapped plans to cut benefits for
government employees after a burst of public discontent, which was widely regarded as a first
warning sign on difficulties arising from notions towards reforming Saudi Arabia’s oil-based

5
economy. Against this background, it becomes evident that the crown prince’s challenge now is to
dream big, but not bigger than what’s possible. At this point, open public revolt is not an issue for the
Saudi elite, but Mohammed bin Salman will surely need to remain mindful of simmering
conservative frustrations. One of the main risks of the Neom is the power of the very bureaucrats he
aims to reform. Since they might be able to push back, quietly delaying projects, sitting on approvals,
or just heading home from work early. (Al Arabiyah 2017; Carey, Nereim, Cannon 2017; Dickinson
2017; Mairs 2017 )

In order to experience to expected outcome, it will be crucial to properly manage the ongoing change
process in the country. At foremost, this requires a convincing communication strategy which shall
be complemented by tangible results for the wider public. Only successfully passed milestones will
help the Crown Prince to mitigate the effects of substantial changes on both the clerical as well as the
bureaucratic front. All in all, this is a high risk which is to be taken very seriously as not to jeopardize
the success of project Neom. (Carey, Nereim, Cannon 2017; Dickinson 2017)

2. Economic considerations
The successful implementation and financial viability of project Neom strongly depends on its
economic considerations. In order to provide for a concise assessment of this risk element, the
framework is again divided into two categories: internal economic considerations as well as external
economic considerations:

2.1 Internal considerations

Project Neom is an ambitious project. This is especially true when it comes to the financial horizon of
this venture. In the preliminary information shared with the public, the total project volume stands at
$ 500 billion. In order to raise this amount of money, the Saudi state through the Public Investment
Fund will have to provide for the lion share of the required funds with the remaining investments
coming from other reputable investors. (Wald 2017)

As described earlier, the financial position of Saudi Arabia has quickly deteriorated in line with
falling oil prices. Despite concerted efforts of OPEC member states to stabilize the price of the black
gold, the American shale boom impacts negatively on the outlook for a significant bounce back of
Saudi Arabia’s most important commodity. Under these circumstances, it does not come as a surprise
that GDP growth - according to IMF - is estimated to end the year between 0-1%. (Brew 2017;
Nereim, Shahine 2017; Wald 2017)

Since the project strongly depends on state finances not to get any worse, repeating visits to the bond
markets with the aim of raising new money to fund ever larger budget gaps, pose a significant risk.
Bloomberg (2017) expects the kingdom to boost debt levels as high as 30 % of total GDP by 2020,
should the country not manage to bring its budget back in surplus through both budget cuts as well as
new growth in the non-oil economy. (Brew 2017; Nereim, Shahine 2017; Torchia, Rashad 2017)

The macroeconomic considerations outlined above do have an impact on the overall financing of the
project, since it may negatively influence both the funds generated through the partial pub lic offering
of the state-owned oil giant Aramco and minimize the ability of the government to provide for
additional financing if required. Given the fact, that numerous analysts have already questioned the
valuation of $ 1 trillion of Aramco mentioned by Mohammed bin Salman, it might be in the interest
of the project to seek for a strategic investor (China) rather than the initially foreseen public offering,
in order to secure more stable funding for Neom. (Brew 2017; Ereli, Karasik 2017; Nereim, Shahine
2017; Torchia, Rashad 2017; Wald 2017)

2.2 External considerations

From a global perspective, the world economy is picking up speed with overall activity strengthening,
despite insecurities in the form of armed conflict (i.e. Syria, Yemen), ongoing Brexit talks or nuclear
power play in both Iran and North Korea. The global upswing experienced during the the first months
of 2017 leads to projected growth of 3.6% this year. The IMF further expects a similar level to be

6
reached in 2018 with projections topping 3.7%. Despite regional differences, global growth is
perceived as robust. (IMF 2017)

Growth perspectives are still widely shaped by ultra-low central bank rates. This leads to an ever
present flow of cheap money and investors seeking for alpha across the globe. While the US Federal
Reserve has already initiated a slow, gradual process of normalizing interest rates, the European
Central Bank has only recently down-scaled its quantitative easing measures. Against this
background, international investors will continue eyeing risky projects while hunting for high returns.
(Randow, Look 2017)

In the light of these developments, Project Neom could attract a promising pool of investors to
finance individual parts of the project to complement the tranches provided through the state-owned
investment fund. However, the recent statement made alongside the investor convention in Riyadh
sums up the sentiment among most international investors: “My reading is that major investors are
teased by what is happening in Saudi but are not yet convinced that they want to put their money
where their mouth is,” said James M. Dorsey, senior fellow at the S. Rajaratnam School of
International Studies in Singapore. “There is a lot of potential here. How realistic that potential is
remains to be seen.” This is understandable, given the mixed track record of prestige projects of
Saudi Arabia. While it has succeeded in implementing heavy industry special zones, other initiatives
including a network of “economic cities” and a financial district in Riyadh, have at least fallen far
short of their high targets. (Ereli, Karasik 2017; Kelly, Hubbard 2017)

In a nutshell, investors will likely require some tangible next steps in the weeks and months to come,
in order to participate in the project. Given the existing skepticism among international investors
concerning the feasibility of Neom, it will be crucial to bring established anchor investors on board.
This will help to reduce risks associated with economic situation of the project, which plays a crucial
role going forward.

3. Social-cultural implications
During the presentation, Crown Prince Mohammed bin Salman highlighted to two important aspects
which could have significant social and cultural implications for project Neom. Firstly, th e cyber city
is supposed to work under the umbrella of specialized laws and regulations which is going to differ
substantially from the current set of social, cultural and legal norms in Saudi Arabia. Secondly, the
project centers around the idea of full automation. As the Crown Prince highlighted during the project
presentation, it would not come as surprise if robots would outnumber humans in the city. Given
these two backbones of Neom, the risk considerations shall focus on two aspects: human-human and
human-robot relations. (Al Arabiyah 2017; Carey, Nereim, Cannon 2017; Dickinson 2017; Mairs
2017)

3.1. Human-human relations

Saudi-Arabia is a country which strongly depends on foreign workers. According to the latest census
from 2014, the population of the Kingdom consists of 21.1 million Saudi nationals as well as 10.4
million foreign workers. The later is predominately divided into workers from third world countries
who are taking care of almost all existing low paid labor, while the second cohort is mad e up of
highly trained and specialized international experts. Given the strict Shariah law in the country,
individual rights and freedoms are limited and human interactions follow the traditional and
conservative rules of Saudi Arabia. (Estimo 2016; Dickinson 2017)

Project Neom is going to have a significant impact on the social fabric of the country given the fact
that social norms and regulations will changed or at least put the test. With the promise of freedom
and liberal regulations, foreigners as well as locals will gladly follow the invitation to the new city.
However, this may come at the prize of building a parallel society with the rest of the country.
Approaches seem to be detrimental in nature, which may cause frictions between the liberal and the
traditional forces in the country. In this context, it is going to be of vital importance to properly
manage the transition of Saudi Arabia, while preserving the cultural identity of the country.

7
Otherwise, the risk of damaging the social fabric of the country might cause turmoil going forward.
(Mairs 2017; Nereim, Shahine 2017)

3.2. Human-robot relations

Robots are going to play a significant part in the daily life of people living in the newly established
economic zone. With regards to the ambitious target of full automation, they are likely to be ever
present and hard to avoid. In this context, a new issue arises as the way technologies are designed,
they can solve or create new problems. Questions which are currently discussed among scholars and
scientists cover a wide-range of topics with potentially significant impact on social and cultural
interactions. (Lin 2016)

This may include issues centering around emotional attachment to robots, which is currently
perceived to be a significant issue since over-reliance on robots or unhealthy relationships could be
an outcome. Since, its still a relatively new and evolving field of study, it is going to be crucial to
follow the latest developments in research, in order to minimize the potential risks for the project.
(Lin 2016; Lemaignan et al. 2017; Mairs 2017)

4. Technological issues
The use of state of the art technology is an important cornerstones of project Neom. In fact, the
individual elements presented during the Future Investment Initiative highlighted the ambitious goal
of Saudi Arabia to catapult itself towards the forefront of technological leadership. The initial plans
presented for Neom include an entire bundle of demanding scientific solutions with many being still
being at a nascent stage at this point in time. Given this early stage of development, there could be
three risks from a technological perspective. (Carey, Nereim, Cannon 2017; Buller 2017)

4.1. Development of nascent technology

The list of technological solutions to be implemented as part of the project are plentiful and include
an exclusive use of solar and wind power for energy production, the use of drones for delivery and
transportation purposes or self-driving cars with the aim reducing both accidents and congested
streets. While scientists and companies around the globe are busy taking all these technologies to the
next level, with the ultimate aim of reaching economies of scale for global implementation,
technological advancements - especially for first movers in the market - may come at a great risk.
Stories from the past show that in markets with competing systems, cutting edge technology may
quickly turn obsolete - putting a significant financial burden on projects, since they feel obliged to
adapt their system to new standard. (Dickinson 2017; Gavril et al. 2017; Leclerc 2017; Randow,
Look 2017)

4.2. Financial implications

Being at the forefront of the next technological revolution sounds thrilling and has the potential to
excite an audience, since it provides for a promising future full of new products and services. The
tough reality of technological advancement is often less glorious than the artsy promotion videos
indicate. Solutions which have not yet proven their capability for a mass market are error-prone in the
nascent stages of development and therefore require substantial testing, managing and controlling
resources before they can be put to mass use. Under these circumstances, the financial implications
for implementing new technology have to be considered and have the tendency of putting pressure on
often tight budgets. (Dickinson 2017; Leclerc 2017; Randow, Look 2017)

4.3. Creating a network of cutting-edge technology segments

One of the main challenges from implementing new technological solutions arises from connecting
them to existing structures or integration into operating systems. However, if an interface can be
detected and put to use, it may benefit both the existing structure as well as new technology. With
regards to Neom, the solution requires building an entirely new system with ultimate aim of
safeguarding full connectivity of (widely untested) technology. In order to reach the ambitious target
of full automation across the project space, an adaptable and modular infrastructure will be crucial to

8
accommodate all inspired solutions. This will require significant talent as well as financial resources.
(Dickinson 2017; Nereim, Shahine 2017; Leclerc 2017; Randow, Look 2017)

4.4. Ecological questions

The ecological risks associated with Neom are low. While any form of economic growth and
development has an impact on the environment, the project has a convincing mitigation strategy for
reducing carbon footprint of its operations. On the energy production side, the exclusive use of wind
and solar-power energy is an important step towards improved environmental sustainability of the
project. In order to further reduce any potential ecological risks of the project, the issues of waste
production and treatment as well as water treatment should be prioritized. So far, no plans have been
made public as regards to the handling of these topics, but the compulsory use of cutting edge
technology in this area would go a long way in positively answering ecological questions associated
with the projects. (Al Arabiyah 2017; Carey, Nereim, Cannon 2017; Dickinson 2017; Mairs 2017)

4.5. Legal considerations

The legal implications of the project are certainly among the interesting aspects of Neom. While few
tangible aspects of the legal framework to be implemented in the economic zone are clear yet,
discussions are already ongoing as to design of rules and regulations steering the social and business
life of the project. In the light of the infant stage of the debate, it might be useful to compare current
legislative elements in Saudi Arabia, the Emirate of Dubai and Germany. Dubai is often regarded as
the most liberal city in the Gulf region and therefore can be used as a potential anchor point for the
future direction of project Neom. The following table provides for an overv iew of such elements of
legislation:

Table 1: Extract of individual elements of law in Germany, Dubai and Saudi Arabia
(Nereim, Shahine 2017)
Saudi
Germany Dubai
Arabia
Other faiths are allowed to
  
practice their religion
Non-muslims can consume
  
alcohol
Movie theaters are allowed   
No religious police is in place   
Women are allowed to dress
  
without Abaya in public
Business is open during prayer
  
times
Workplace gender integration   
Proselytizing is prohibited   
Lashes administered for certain
  
criminal offenses
Apostasy is a crime punishable
  
by death
Homosexuality is illegal   

9
Table 1 clearly shows that the road for Saudi Arabia towards a more liberal society as outlined by its
Crown Prince is going to be a long one, which will require critical and important decisions impacting
on the success of the project. For example, the decision not serve alcohol within the project
jurisdiction may negatively impact its prospects as a tourism destination and might lead to individual
talent to rather opt for opportunities in Dubai, which offers a more liberal stand on this issue. All in
all, legal considerations have both the potential to further promote the project or to s et up additional
hurdles hindering its success. Against this background, the risks associated with this question are not
to be underestimated. (Dickinson 2017; Mairs 2017; Nereim, Shahine 2017)

Conclusion
With regards to its targets, scope and scale, Project Neom is a challenging and ambitious endeavor. In
order to mitigate the significant risks outlined above, the authors recommend to addressing the
following key areas with the aim of securing stakeholder confidence and financial stability of the
project:

Secure adequate funding

While the use of freed up Aramco financing to provide liquidity for the designated investment fund is
an understanding narrative, international investors have raised question marks over the valuation of
Aramco. In order to mitigate the risk of falling investor confidence, the Saudi Arabian rulers should
seek to broaden the financing base. This would further reduce the probability of the project being
postponed, delayed or liquidated at an early stage of planning.

Work towards the early presentation of a prototype

Glossy posters and artsy movie clips may have the capacity to excite parts of an audience. However,
when it comes to attracting the kind of money that project Neom is planning to invest going forward,
investors (as much as ordinary people and other stakeholders in the country) want to experience
tangible results. Given the mixed results of past large-scale projects in the country, the focus on
implementing a working prototype is paramount. This will allow the project lead ers to convince its
audience that this ambitious project is not entirely build on sand (while it literally will be of course).

Moderate and manage the ongoing change process

The foreseen implementation of new rules and regulations with the effect of partially abandoning the
traditional, conservative Wahhabism for a moderate way of Islam will likely irritate and stress parts
of the society. In this context, the success of the project will also be determined by ability of the
leadership in the country to properly moderate and manage this important change process. There is a
substantial risk that more traditional parts of society are going to jeopardize the well-being of the
country, in order to secure their own status and benefits such as the cleric. Against this background,
the role of the Crown Prince, as well as his father King Salman, as enablers and facilitators will
probably have a big impact on the successful implementation of Neom and its acceptance among the
Saudi population.

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