FINN45715: Risk Management in Islamic Finance

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• To provide students with an advanced understanding of unique risks in Islamic financial products and institutions arising due to compliance with Shariah principles and changes in the financial markets and the economy.
• To critically examine the role of different stakeholders in managing different risks at the institutional and regulatory levels.
• To advance students understanding of issues arising in managing different types of risks facing Islamic financial institutions.
• To critically evaluate Shariah compliant risk management instruments and systems to mitigate risks in Islamic finance.

• Introduction to risks in Islamic banks and products
• Risk management framework and role of different stakeholders
• Systemic risks and banking stability: A regulatory perspective
• Risk governance and operational risk management
• Critical issues in liquidity risk management
• Managing credit and market risks
• Legal/Shariah compliance risks
• Shariah compliant risk management products and processes

Subject-specific Knowledge:

• On completion of this module, students should
• Have advanced knowledge of various types of risks embedded with the Islamic banking business at the institutional and product levels.
• Have an advanced understanding of the importance of risk management in the Islamic banking industry.
• Have an advanced understanding of the significance of Shariah compliance and reputational risks arising in Islamic financial sector.
• Be familiar with the legal risks involving the Islamic financial services.
• Have knowledge of the critical issues arising in using traditional risk management instruments in Islamic finance.

Subject-specific Skills:

• On completion of this module, students should be able to:
• Have the ability to recognize the risk management roles processes and practices at the regulatory and institutional levels.
• Have the ability to understand and learn processes and practices to manage risks at the bank level.
• Use their understanding of legal and Shariah principles to analyse different risk management products in Islamic finance.
• Have the ability to identify the key risks arising in different modes of financing.

Key Skills:

• Independent learning within a defined framework at an advanced level.
• Cognitive skills of critical thinking, analysis and synthesis.
• Effective written communication and essay-writing skills.
• Skills of independent learning within a defined framework of study at an advanced level.
• The ability to seek out and use relevant data sources, including electronic and bibliographic sources.

• Lectures convey the subject-specific knowledge and provide students with an opportunity to learn new concepts, principles and philosophies.
• Seminars enable students to consolidate, extend and apply this knowledge through exchanging views and ideas, thus developing their subject-specific skills and key skills.
• Assessment is through a summative essay on a specific topic. The essay tests students knowledge and understanding of the subject matter, and their skills of critical thinking and synthesis.

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