Risk analysis issues for Islamic banks

Conventional banks are faced with well understood risks. Islamic banks are also faced with the same well understood risks. However many of the risks faced by Islamic banks are different from those of conventional banks. This module highlights the issues involved in identifying, measuring and managing Islamic banking risk.

• What are the risks faced by Islamic banks which are not faced by conventional banks?
• Business risks - displaced commercial risk, withdrawal risk, solvency risk
• Governance risks- fiduciary risk, operational risk, transparency risk
• Transactions risks-credit risk, market risk, mark up risk
• Treasury risks- asset and liability management, liquidity risk, hedging risk
• Systemic risks- regulatory risk, business environment risk, institutional risk
• CAMEL ratings for conventional banks
• CAMEL ratings for Islamic banks