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Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes Risk management in Islamic vs. conventional.

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Presentation on theme: "Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes Risk management in Islamic vs. conventional."— Presentation transcript:

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2 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 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 – –Website:

3 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes articles on Islamic banking on Delphi’s website are on: "Competitive Pricing of Islamic Financial Products","Competitive Pricing of Islamic Financial Products", –May 95, Horizon, Institute of Islamic Banking & Insurance, London: "Islamic Banking” –1st Quarter 99, Princeton Economics Journal,

4 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes financial risk some actions can protect the same actions can destroy

5 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes financial risk - a film

6 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 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 "Key Financial Instruments: understanding innovation in the world of derivatives discussion: Does Islamic banking risk differ from Western banking risk? Comments invited and discussion will be uploaded onto –www.dc3.co.uk/islamicbanking1.htm

7 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 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

8 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Acquisition Risk Careless Error Risk Competitive Risk Commodity Risk Communication Risk

9 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Country Risk Credit Risk Cultural Risk Currency Transaction Risk Currency Translation Risk

10 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Currency Economic Risk Customer Satisfaction Risk Disaster Recovery Risk Economic Activity Risk Energy Price Risk

11 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Environment Risk Equity Market Risk Fraud (banker) Risk Fraud (customer) Risk Fraud (staff) Risk

12 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Image / PR Risk Information Risk Inflation Risk Interest rate Risk Interaction Risk

13 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Language Risk Legal Risk Liquidity Risk Morbidity Risk Mortality Risk

14 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Operational Risk Performance Measurement Risk Political Risk Competence / Understanding Concentration of assets Risk

15 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Concentration of liabilities Risk Concentration of business type Risk Convertibility Risk Property (Real Estate) Risk Rating Agency Risk

16 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Regulatory Risk Religious Risk Resignation Risk Settlement Risk Systemic Risk

17 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk types Tax Risk Technological Risk Transport Risk Weather Risk

18 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 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

19 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 Warren Edwardes banking risk - a movie

20 Islamic vs Western risk management ICM Islamic Capital Funding conference, KL 5th Oct 1999 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 – –Website:


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