Risk Management for Islamic Banking Products

Risk management is one of the most powerful indicators of high business reputation of the bank. Its level is reflected in the Bank’s credit rating, which in this aspect affects the value and volume of funding. Effective risk management is the key to stable relations with supervisors and minimizes the possibility of risk events. In modern conditions the question is often asked about the diversity of the economy, as well as the elicitation of alternative sources of financing, including methods of risk management. According to many scholars, Islamic finance can act not only as alternative, but complementary ways of financing. Islamic finance is used, regardless of religious beliefs of a person; at the same time the traditional banks do not always find their application in Islamic countries. It says about the competitiveness of Islamic finance and the free movement in all economic systems of the world. This article describes some of the local risk management techniques of Islamic banks, which contain a detailed description of the procedures for individual components of the risk management process, peculiar features of the management of individual types of risks, the analysis of the bank’s stability to risks, the procedure of using the results obtained in the process of risk management and analysis of the stability of the bank, and other necessary procedures, orders and regulations.