Despite water shortages and infrequent rainfall in arid and semi-arid areas, their recent floods show that flooding tends to be more severe and life-threatening. However, flooding is a poorly understood natural hazard in arid and semi-arid areas and its management needs to address a set of challenges, some of which are unique to these zones. Hence, it is of great demand to develop a comprehensive understanding of Flood Risk Management (FRM) difficulties and needs that are significant in these regions. This review paper aimed to understand the current state of FRM in arid and semi-arid areas and to explore challenges existing in FRM of these zones, based on the authors’ experiences from practice-based research. The study identified four main classes of challenges: (i) regional features and flood characteristics, (ii) operational challenges, (iii) technical challenges, and (iv) management/organizational challenges. It was then concluded that these FRM challenges are multidimensional and coupled together. After discussing the challenges, the study addressed requirements and provided an outlook on solutions, further improvements, and possibilities for FRM in these regions.