Bahrain: GFH to develop risk-monitoring

24 November 2004

THE Bahrain-based Gulf Finance House B.S.C., (GFH) yesterday announced that it had initiated the development of a cutting-edge Islamic risk management system to help the bank regularly monitor and assess the risk sensitivity of its investment portfolio and meet regulatory compliance requirements effectively, writes Mehmood Rafique.

Announcing the path-breaking initiative during the Middle East Financial Technology and Conference (MEFTEC), senior GFH officials said that the risk management solution will be developed jointly with the bank's technology partner, the Kuwait-based vendor of integrated Islamic software, Path Solutions. GFH's core banking system runs on iMal, which is the industry-leading integrated Islamic banking software from Path Solutions.

Commenting on the imperative of having adequate risk management tools in an age of increasing market complexity and regulatory requirements, Esam Janahi, Chief Executive Officer, GFH said: "By developing a risk management system that caters to a Sharia'h-compliant banking regime, we believe we are taking a pioneering step. It is becoming increasingly imperative that Islamic financial institutions put in place risk management systems that address the unique characteristics of the industry."

"What we are looking at in the new risk management system is a whole host of advanced and integrated features. We expect the system to have the capability not only to address compliance and regulatory requirements but also to help us in creating value for our shareholders and investors by efficient management of our on and off balance sheet risks," he said.

He added that innovation was an integral part of the business philosophy of GFH and the move to develop a customised risk management system was another testimony to this.

Speaking on the new risk management system, Silvan Varghese, the Head of Risk Management of GFH said: "The risk characteristics of Islamic banks are unique. Apart from exposure to the risks that are faced by conventional banks, Islamic banks face additional risks as a result of the Sharia'h-compliant nature of their business. What we intend to do is to use current techniques available and customise them to meet requirements of Islamic Banks in general and GFH in particular."

Naji Moukadam, Executive Vice President (Development), Path Solutions, said: "We are extremely proud to be asked to develop a pioneering, industry-leading risk management system that serves the special nature of the Islamic finance and banking industry. Islamic finance and banking is waking up to risk management and we are confident that the new tool will be a first-of-its-kind in the industry."

© Arab News 2004

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