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Risk management in Islamic vs. conventional banking

Risk management in Islamic vs. conventional banking. EXPLORING THE LATEST INNOVATIONS IN ISLAMIC CAPITAL FUNDINGS Tuesday 5th OCTOBER 1999, Sheraton Imperial Hotel, Kuala Lumpur . Warren Edwardes, Chief executive officer, Delphi Risk Management Limited Email: we@dc3.co.uk

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Risk management in Islamic vs. conventional banking

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  1. Risk management in Islamic vs. conventional banking • EXPLORING THE LATEST INNOVATIONS IN ISLAMIC CAPITAL FUNDINGS • Tuesday 5th OCTOBER 1999, Sheraton Imperial Hotel, Kuala Lumpur . • Warren Edwardes, Chief executive officer, Delphi Risk Management Limited • Email: we@dc3.co.uk • Website: www.dc3.co.uk Warren Edwardes

  2. articles on Islamic banking on Delphi’s website are on: • "Competitive Pricing of Islamic Financial Products", • May 95, Horizon, Institute of Islamic Banking & Insurance, London: • www.dc3.co.uk/islamic.htm • "Islamic Banking” • 1st Quarter 99, Princeton Economics Journal, • www.dc3.co.uk/islamicbanking.htm Warren Edwardes

  3. financial risk • some actions can protect • the same actions can destroy Warren Edwardes

  4. financial risk - a film Warren Edwardes

  5. A check-list of banking risk types • from my book: "Key Financial Instruments: understanding innovation in the world of derivatives" Dec. 99, Commissioned by Financial Times Prentice Hall ISBN 0273 63300 7 • discussion: Does Islamic banking risk differ from Western banking risk? • Comments invited and discussion will be uploaded onto • www.dc3.co.uk/islamicbanking1.htm Warren Edwardes

  6. A list of Western banking risk types • To put it simply and directly, • if the bosses do not or cannot understand both the risks and rewards in their products, • their firm should not be in the business. - • William J. McDonough, President, Federal Reserve Bank of New York Warren Edwardes

  7. banking risk types - 1-5 • Acquisition Risk • Careless Error Risk  • Competitive Risk  • Commodity Risk  • Communication Risk  Warren Edwardes

  8. banking risk types - 6-10 • Country Risk  • Credit Risk  • Cultural Risk  • Currency Transaction Risk • Currency Translation Risk Warren Edwardes

  9. banking risk types - 11-15 • Currency Economic Risk • Customer Satisfaction Risk  • Disaster Recovery Risk  • Economic Activity Risk  • Energy Price Risk  Warren Edwardes

  10. banking risk types - 16-20 • Environment Risk  • Equity Market Risk  • Fraud (banker) Risk • Fraud (customer) Risk • Fraud (staff) Risk Warren Edwardes

  11. banking risk types - 21-25 • Image / PR Risk  • Information Risk  • Inflation Risk  • Interest rate Risk  • Interaction Risk  Warren Edwardes

  12. banking risk types - 26-30 • Language Risk  • Legal Risk  • Liquidity Risk  • Morbidity Risk  • Mortality Risk  Warren Edwardes

  13. banking risk types - 31-35 • Operational Risk  • Performance Measurement Risk  • Political Risk  • Competence / Understanding  • Concentration of assets Risk Warren Edwardes

  14. banking risk types - 36-40 • Concentration of liabilities Risk • Concentration of business type Risk • Convertibility Risk • Property (Real Estate) Risk  • Rating Agency Risk  Warren Edwardes

  15. banking risk types - 41-45 • Regulatory Risk  • Religious Risk  • Resignation Risk  • Settlement Risk  • Systemic Risk  Warren Edwardes

  16. banking risk types - 46-49 • Tax Risk  • Technological Risk  • Transport Risk  • Weather Risk  Warren Edwardes

  17. banking risk types - 50 • No Risk • It’s impossible to take an unnecessary risk. • Because you only find out whether a risk was unnecessary • after you’ve taken it • Giovanni Agnelli, President FIAT Warren Edwardes

  18. banking risk - a movie Warren Edwardes

  19. Risk management in Islamic vs. conventional banking • EXPLORING THE LATEST INNOVATIONS IN ISLAMIC CAPITAL FUNDINGS • Tuesday 5th OCTOBER 1999, Sheraton Imperial Hotel, Kuala Lumpur . • Warren Edwardes, Chief executive officer, Delphi Risk Management Limited • Email: we@dc3.co.uk • Website: www.dc3.co.uk Warren Edwardes

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