This one day seminar will examine the very latest trends and techniques in managing assets and liabilities within an Islamic financial institution. We shall examine the core risks facing Islamic banks as well as tools available for hedging and risk mitigation. The seminar will examine global as well as local trends and initiatives.
KEY LEARNING OUTCOMES
Understanding Profit Sharing Investment Accounts, Capital Adequacy and Liquidity Management from an ALM perspective
Assessing Liquidity Management and Examining Basel III and IFSB Standards
Analyzing Hedging Tools, Stress Testing and Systemic Risk Management in Islamic financial institutions
Understanding Specific Risk, Capital Adequacy and Liquidity Management Issues for Islamic Banks in Southeast Asia
Examining Islamic Hedging and Risk Management Tools
Agenda
9.00am – 10.30am
Session One: Examining Profit Sharing Investment Accounts, capital Adequacy and Liquidity Management Profit sharing investment accounts
Account structure under Mudarabah arrangement
Rate of return risk and displaced commercial risk
Smoothing and loss reserves
Capital adequacy and challenges with the IFSB approach
The IFSB approach to capital adequacy
Incorporating displaced commercial risk in the CAD formula
Challenges with the IFSB approach and alternative formulations
Liquidity management and Basel III
Changes introduced by Basel III
Challenges in meeting liquidity ratios for Islamic banks
Dr Ken Baldwin — Former Director, Financial Policies & Planning, Islamic Development Bank
10.30am – 11.00am
Coffee
11.00am – 12.30pm
Session Two: Analyzing Hedging Tools, Stress Testing and Systemic Risk in Islamic Banks Natural hedging as an alternative to derivatives
Sharia and other challenges with derivatives
Structural approaches to risk reduction
Stress testing for Islamic banks
What unique stress tests do Islamic banks need?
What are the specific challenges implementing stress testing in Islamic banks?
Islamic banks and systemic risk
How are contagion effects different in financial sectors which include Islamic banks?
Dr Ken Baldwin — Former Director, Financial Policies & Planning, Islamic Development Bank
12.30pm – 2.00pm
Lunch
2.00pm – 3.00pm
Session Three: Examining Specific Risk, Capital Adequacy and Liquidity Management Issues for Islamic Banks in Southeast Asia
Discussing risk management for Islamic financial institutions in Southeast Asia: looking at risk beyond Shariah compliance
Discussing the key concept of liquidity constraints (due to limited Islamic instruments and market depth) for Islamic financial institutions, and taking steps to effectively manage this issue
Examining risk transfer via equity based products as an alternative tool
Azleena Idris — Managing Director and Head of ASEAN, SHAPE Knowledge Services
3.00pm – 3.30pm
Coffee
3.30pm - 4.30pm
Session Four: Key Structuring and Developmental Issues for Islamic Profit Rate Swaps (IPRS)
Reminder on conventional interest rate swap structures
Examining important contracts for the development of IPRS – Waad and Murabahah
Pricing and valuation issues for Islamic IPRS
Identifying real-life challenges
Overview of key Shariah and risk management issues
