Sani Suleiman, Dlhatu and Adam Sa'ad, Auwal and Syed Jaafar Alhabshi, Syed Musa and Bashir Aliyu, Umar
(2021)
Achieving financial stability of Islamic banks through a Bespoke Enterprise Risk Management Framework (ERMF).
In: International Conference on Islamic Financial Literacy (ICiFIL 2021), 7-8 July 2021, Online.
(Unpublished)
Abstract
Definition:
Enterprise Risk Management (ERM) —various ways firms keep check on their risks to harness opportunities and attain institutional objectives.
ERM Framework (ERMF) —a document aim to set general guidelines for managing risk of events or actions that could result in adverse outcomes for the institution (COSO, 2004)
> ERMF: increases probability and quantum of success and reduces the probability and quantum of failure in the pursuit of organisational objectives.
> ERMF: aids IBs to achieve their objectives (risk-adjusted returns) within the risky real-world business environment
Key objectives of ERMF:
To provide the IB with an awareness of key risks within its Islamic Banking business model
To establish common risk culture amongst staff and management, facilitating communication and goal congruence in line with Shari’ah principles.
To provide the IB with Shari'ah-compliant instruments
To stipulate the risk governance structure in the IB with attendant roles and responsibilities of constituent organs.
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