Risk Management in
Islamic Financial Instruments
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6 Are mark-up rates on loans set taking account of the loan grading?
Maintaining an Appropriate Risk Measuring, Mitigating, and Monitoring Process
yes No
1 Is there a computerized support system for estimating the variability of earnings and risk
management?
2 Are credit limits for individual counterparty set and are these strictly monitored?
3 Does the bank have a policy of diversifying investments across different countries
4 Does the bank have a policy of diversifying investments across different sectors (like
manufacturing, trading etc.)?
5 Does the bank have a policy of diversifying investments across different Industries (like
airlines, retail, etc.)?
6 Does the bank have in place a system for managing problem loans?
7 Does the bank regularly (e.g. weekly) compile a maturity ladder chart according to
settlement date and monitor cash position gaps?
8 Does the bank regularly conduct simulation analysis and measure benchmark (interest)
rate risk sensitivity?
9 Does the bank have in place a regular reporting system regarding risk management for
senior officers and management?
Part II: Risk Reporting
Maintaining an Appropriate Risk Measuring, Mitigating, and Monitoring Process-Risk Reports
yes No
1 Capital at Risk Report
2 Credit Risk Report
3 Aggregate Market Risk Report
4 Interest Rate Risk Report
5 Liquidity Risk Report