Risk Management for Islamic Financial Institutions

IB2002/IB5033/TK5413/PC5053
School of Professional Studies (SPS)/School of Graduate Studies (SGS)

INTERNATIONAL CENTER FOR EDUCATION IN ISLAMIC FINANCE (INCEIF)

June Semester 2017

ASSIGNMENT 1 (30%): COMPULSORY

Instructor: Prof. Saiful Azhar Rosly, Ph.D

Contact: saiful@inceif.org, Mobile 0126756511, Office 0376514020

Instructions:

1. Choose any Islamic Bank of your choice in your own country or other countries.
2. Choose 2016 Annual Report of the Bank.
3. Minimum 10 pages (excluding date, diagrams and illustrations), 1.5 margin
4. Deadline: Latest 7 days after final examination (LMS submission only).

Answer all of the following:

1. What is the difference between risk-management framework and risk management

process?

2. How is banks risk-appetite connected to its risk governance?

3. Discuss highlights of Banks Performance.

4. What is the business model adopted by the Bank?

5. Explain how does the bank identify credit risk?

6. Discuss how does the bank mitigate credit risk

7. Expenses on loans/financing impairment are charged to both depositors and

shareholders. Compare Return on Equity (ROE) and Return on Mudaraba deposits
(ROMD) and discuss.

8. Income derived from the investment of Shareholders Fund. Describe how these
funds are used to generate income and its rate of return.

9. Analyse and discuss banks Islamic securities bought/held for trading.

 How do you measure risk associated with Islamic securities bought/held for trading.

10. Do you see banks holding of physical assets and inventories? How are these items
funded and risks associated with them?

11. Calculate High Quality Liquidity Assets (HQLA)

12. Critically discuss fixed deposit concentration risk

13. Critically discuss money-market/wholesale funding concentration risk

14. Calculate Income-Gap based on the information of VRA and FRA and deposits given.

15. Discuss maturity gap based on report of market risks.

16. Discuss how does the bank mitigate market risk?

17. Discuss the use of derivatives in the bank and for what purpose?

18. Calculate capital adequacy ratio for credit, market and operational risks using CAR =
10.5%

19. Discuss the Shariah non-compliance events in 2016

20. Discuss Banks preparation in fulfilling Basel 3 Liquidity risk requirement

END