|
Operational risk in conventional banking is relatively easy to define, identify and measure. Trying to undertake a similar exercise within an Islamic financial institution is significantly more challenging. Heightened documentation risk – the risk of the wrong documentation being used, or being misused, or applied incorrectly is a significant risk for an Islamic bank, and one that regulators are taking notice of. Through the very nature of their structure, composition, philosophy and business activities – the avoidance of uncertainty and the adherence to risk-sharing principles – exposure to legal risk is very real for Islamic financial institutions, including that of cross-border legal risk.
Shariah risk is unique to Islamic banking and has been documented extensively, but as regulation develops this remains a challenge for banks to measure and manage. Collectively, these risks represent a very genuine challenge for Islamic banking operations, customers and stakeholders and require careful identification, mitigation and management.
KEY LEARNING OUTCOMES
- A reminder of the unique operational risks facing Islamic banking and finance: legal and Shariah in particular
- Defining and managing cross-border legal risk in the context of Islamic finance
- Assessing instances of legal risk in Islamic banking and finance and taking steps to mitigate such risk
- Identifying and discussing common instances of documentation risk in Islamic finance and how it can be managed
- Examining the latest permutations of local regulation and requirements relevant to legal risk: Islamic Financial Services Act 2013 and Bank Negara Malaysia policy documents, guidelines and Shariah standards
- Managing Shariah risk: reiterating where Shariah risk occurs and manifests in an Islamic financial institution
- Building a robust and effective legal and Shariah risk management capability within an Islamic financial institution
WHO WILL BENEFIT?
The seminar will be highly beneficial to anyone in a bank or financial institution involved in the structuring, development, marketing and risk management of Islamic financial products, and in particular, functions such as legal, compliance and audit.
- Compliance officers and in-house counsel
- Private practice lawyers
- Islamic bankers and management
- Shariah advisors, officers, control and review staff
- Risk managers
- Product development officers
- Operations managers
- Consultants and advisors
- Financial audit and review team members
- Regulators and supervisory bodies
Agenda
| 09:00 – 09:45 |
Session One: Overview – Understanding Legal, Documentation and Shariah Risk in Islamic Banking and Finance
- Reminding ourselves of the unique operational risks facing Islamic banking and finance: legal and Shariah in particular
- Examining recent significant cases of legal and Shariah risk in Islamic finance and what they teach us
- Discussing the intricacies of cross-border and multi-jurisdictional transactions
- An overview of global initiatives and regulatory developments to strengthen and develop Shariah governance and manage Shariah risk
- Building a robust and effective legal and Shariah risk management capability within an Islamic financial institution
Mian Muhammad Nazir — CEO, Dar Al Sharia |
| 09:45 – 10:45 |
Session Two: Effectively Recognizing and Managing Cross-Border Legal Risk in Islamic Banking and Finance
- Defining exactly what is cross-border legal risk in the context of Islamic finance
- Identifying where cross-border legal risk typically arises in Islamic banking and finance activities
- Evaluating and managing multi-jurisdictional transactions and the associated legal complexities
- Analyzing where and how Shariah comes into the assessment of cross-border legal risk
- Discussing cross-border legal risk as a form of operational risk and how it can be managed
Mian Muhammad Nazir — CEO, Dar Al Sharia |
| 10:45 – 11:15 |
Coffee |
| 11:15 – 12:45 |
Session Three: Understanding and Managing Legal and Documentation Risk in Islamic Banking (Part 1)
- What is and where does legal and documentation risk occur considering the products and activities local banks are involved with?
- Defining exactly what is legal risk in the context of Islamic banking: defective transactions; failure to protect assets; misrepresentation as examples
- Identifying and discussing common instances of documentation risk: incorrect selection of documents and contracts; misuse or poor drafting of documentation; incorrect application of documentation and/or legal principles
- The potential challenges of interpreting Shariah clauses and the enforceability of contracts in Islamic banking and finance
- Examining the latest permutations of local regulation and requirements: Islamic Financial Services Act 2013 and others
- Assessing the significant role of Bank Negara Malaysia policy documents, guidelines and Shariah standards
- Discussing the management of legal and documentation risk in conjunction with Shariah risk
Mohd Johan Lee — Managing Partner, J Lee & Associates |
| 12:45 – 14:00 |
Luncheon |
| 14:00 – 15:30 |
Session Three: Understanding and Managing Legal and Documentation Risk in Islamic Banking (Part 2)
Mohd Johan Lee — Managing Partner, J Lee & Associates |
| 15:30 – 16:00 |
Coffee |
| 16:00 – 17:00 |
Session Four: Recognizing and Managing Shariah Risk in Islamic Banking & Finance: Latest Issues and Challenges
- What Shariah risk is: reiterating where Shariah risk occurs and manifests in an Islamic financial institution
- Appraising the Shariah Governance Framework (SGF) and its workings and objectives in Malaysia
- Discussing the workings and objectives of Shariah audit and compliance functions: latest developments and regulation
- Assessing the importance of Shariah non-compliance reporting: recent developments and regulation
- Planning, developing and implementing an effective, robust and all-encompassing Shariah risk management program within an Islamic financial institution
Reizal Amiruddin — Head, Shariah Research and Advisory, AmBank Islamic |
| 17:00 |
Coffee and Networking |
|
