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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 • 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
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
financial risk • some actions can protect • the same actions can destroy Warren Edwardes
financial risk - a film Warren Edwardes
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
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
banking risk types - 1-5 • Acquisition Risk • Careless Error Risk • Competitive Risk • Commodity Risk • Communication Risk Warren Edwardes
banking risk types - 6-10 • Country Risk • Credit Risk • Cultural Risk • Currency Transaction Risk • Currency Translation Risk Warren Edwardes
banking risk types - 11-15 • Currency Economic Risk • Customer Satisfaction Risk • Disaster Recovery Risk • Economic Activity Risk • Energy Price Risk Warren Edwardes
banking risk types - 16-20 • Environment Risk • Equity Market Risk • Fraud (banker) Risk • Fraud (customer) Risk • Fraud (staff) Risk Warren Edwardes
banking risk types - 21-25 • Image / PR Risk • Information Risk • Inflation Risk • Interest rate Risk • Interaction Risk Warren Edwardes
banking risk types - 26-30 • Language Risk • Legal Risk • Liquidity Risk • Morbidity Risk • Mortality Risk Warren Edwardes
banking risk types - 31-35 • Operational Risk • Performance Measurement Risk • Political Risk • Competence / Understanding • Concentration of assets Risk Warren Edwardes
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
banking risk types - 41-45 • Regulatory Risk • Religious Risk • Resignation Risk • Settlement Risk • Systemic Risk Warren Edwardes
banking risk types - 46-49 • Tax Risk • Technological Risk • Transport Risk • Weather Risk Warren Edwardes
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
banking risk - a movie Warren Edwardes
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