Risk Management in Islamic Banks

COURSE DESCRIPTION: It is widely accepted that the Shari’ah banking model is one of the fastest growing areas of international Banking & finance over the next five to ten years. The course is designed for participants seeking an in–depth understanding of the Shari’ah Risk Management. After analyzing the concept of Risk management in Islamic Banking, the course moves on to the practical aspects of Shari’ah application, with demonstrations from case studies and interactive exercises.

The course aims at providing attendees with an understanding on how Islamic banks work and the kind of risk they are exposed to. In addition, participants will discuss the criteria of risk management from the Shari’ah point of view. Experts will look into the Shari’ah-intrinsic techniques of risk management and the Basel II proposals of risk mitigation and how should they apply to Islamic banking. Attendees will understand the methodologies of calculating capital adequacy in Islamic banks as proposed by ISFB and finally, they will discuss processes of monetary authorities’ supervision on Islamic banks.

COURSE SUMMARY:
• Islamic Banking in today’s World: Islamic Law and finance, Why Islamic Finance?, Growth of Islamic Banking, Regulating Islamic bank, Islamic Banking relation with Central banks, Islamic banking centers, Assets of Islamic banks

• Risks in Islamic banks: The nature of Islamic finance and risks involved, Risk implications of the prohibition of interest, Credit risk in Islamic banks, Operational Risks in Islamic banks, Market risks in Islamic banks, Other risks: legal, withdrawal, Shari’ah confidence, litigation, etc., Are risks in Islamic banks different from the ones in conventional banks?

• Comparison and contrast of risks in Islamic banks and risks in conventional banks

• Risks addressed by Basel II and IFSB: Credit Risk, Operational Risks, and Trading Book Risk

• Risk Mitigation: kinds and effect on calculation of capital adequacy

• The three Pillars of Basel II Accord: Capital Adequacy, Supervisory Review Process, Market Discipline

• Monetary authority supervision. Is there a difference between Islamic banks and conventional banks?

• Market disclosure in Islamic banks: a serious administrative-cum-political problem!

• Managing risks in Islamic banks: Establishing risk management environment, policies and procedures, Maintaining processes of risk measurement, mitigation, and internal monitoring and control, Shari’ah-Intrinsic risk mitigation techniques, Management processes and techniques of specific risks

• Sensitivity of Islamic banking operations to Basel II proposals: Financial intermediation in Islamic banks and the myth of two-tier Mudarabah, Traditional conservatism of Islamic banks (worry about the idea), Islamic Financing Modes and Practices Sensitive to Basel II Proposals, The effect of restricted deposits, unrestricted deposits and deposits in current accounts on credit and other risks’ exposure in Islamic banks

• Capital adequacy: Importance of capital adequacy in the banking industry, Basel II proposals for the calculation of capital adequacy in conventional banks, Capital adequacy in Islamic banks: The issue of last resort

• Importance and Calculation of credit Risk

• IFSB Standard on credit risk in Islamic banks

• Methodologies of credit risk calculation

• IFSB Standard on operational risk and its calculation

• IFSB Standard on market risk and its calculation

• Calculation of Minimum Capital Requirement in Islamic banks

TARGET AUDIENCE: Investment Bankers, Corporate and Commercial Bankers, Corporate Financiers, Private Bankers, Analysts, Asset managers, Risk Management Managers, Consultants, Lawyers, Investment Advisors, Regulators, Auditors and compliance professionals.

Course reviews:

“The course has opened an entire new world for me: I got a deep insight on Islamic banking. I now wish to expand to the Middle East with my business”

Chris Phillips

Executive Consultant, Mooby Corp

“As an investment banker, I deeply appreciated the lecturer: he was highly knowledgeable about every detail of risk management in Islamic Banks. I very much recommend the course”

Ben Meiss

Investment Banker, Thrift Bank

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