Bahrain financial house working on Islamic risk management system

Dubai Saturday, November 27, 2004

The Bahrain-based Gulf Finance House (GFH) has begun the development of a cutting-edge Islamic risk management system

This is expected to help the bank regularly monitor and assess the risk sensitivity of its investment portfolio and meet regulatory compliance requirements effectively.

Senior GFH officials said that the risk management solution would be developed jointly with the bank’s technology partner, the Kuwait-based vendor of integrated Islamic software, Path Solutions.

GFH’s core banking system is based on iMal, which is the industry-leading integrated Islamic banking software from Path Solutions.

“By developing a risk management system that caters to a Sharia-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,” said Esam Janahi, chief executive officer of Gulf Finance House.

He added, “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.
Speaking on the new risk management system, Silvan Varghese, head of risk management for Gulf Finance House, pointed out that 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-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 Gulf Finance House in particular,” said Varghese.

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