Articles

As Financial Risk Management for Islamic Banking and Finance (Palgrave Macmillan) is hitting the shelves, co-author Ioannis Akkizidis spoke with Business Guide to explore risks related to Islamic finance and private banking.

This article published by Swiss magazine Private Banking, reproduces an interview with Risk management expert Ioannis Akkizidis, author of the book Financial Risk Management for Islamic Banking and Finance.

Islamic finance is typified by products which are based around a small number of contracts. Risk in Islamic finance revolves around the nature of these financial contracts. Because of the methods stipulated for participation, however, Shari'ah-compliant financial products are quite different from their conventional counterparts. Islamic financial institutions (IFIs) are exposed to credit risk, market risk, operational risk, equity investment risk and "rate of return" risk. Mushakah, mudarabah, murabaha, ijara, salam and istisna are some of the more popular types of Shari'ah-compliant contracts. Dr Sunil Kumar, Middle East, IRIS integrated risk management ag Switzerland, discusses the risks associated with a murabaha contract and related risk mitigation measures.

Originally published in NewHorizon magazine, January-March 2008.

Islamic Banking has made rapid progress in the last two decades. What started as a social activity in Egypt in the form of Mitghamr Savings Association in the early 1960s became a movement in the 1990s. The setting up of Dubai Islamic Bank and Islamic Development Bank during the 1970s the Islamic Research and Training Institute in 1981, and the Accounting and Auditing Organization for Islamic Financial Institutions in 1990 were landmarks in the development of Islamic Banking.

This paper intends to identify various risks involved in the Large Value Payment System (LVPS). The nature of risk depends of various parameters, such as parties involved, mode and time of settlement and extent and type of technology used. The measures which could control and reduce risks are also discussed.

The author concludes that institutional support (such as that of central banks) is a prerequisite and a conditio sine qua non for making payment systems and thus settlements safe and less risky.

This article discusses about the credit risk that financial institutions are expose to due to a booming market in providing high creditability. The article explains the usage of both Qualitative and Quantitative criteria to evaluate the creditability that institutions should provide to their clients/counterparties. It shows how such creditability must be balanced with the actual counterparty’s rate that also indicates the degree of potential risk exposure. It also emphasizing in the importance of dynamic simulation to design the strategies that could be applied for the existing and new types of credit products. Moreover, it discusses how such simulations and analysis of strategies can be used to increasing profitability as well as providing a transparent picture and management on the future risk exposes. Finally, it shows how the evaluation of creditability and its potential outstanding risks are linked to the three pillars of Basel II.

The article was published in the biggest political & financial Greek Newspaper named KATHIMERINI both on paper and electronic versions.

Paper prepared for the Actuarial Studies in Non-Life Insurance Colloquium held on June 19-22 2007 in Orlando, USA.

Two distribution dependent IBNR claims reserving models with gamma distributed paid claims are considered. The first model assumes independent development periods and allocates the coefficient of variation of the total ultimate claims of a line of business with multiple underwriting periods to the coefficient of variation of the total ultimate claims of a single underwriting period inverse proportionally to the squared-root premium volumes. The second model extension is based on a simple Fréchet like multivariate distribution, which models the whole range of dependence between independence and comonotone dependence. The chosen model uses only one additional dependence parameter, which is chosen such that it yields the most conservative model for IBNR claims reserving with respect to the concordance order for the bivariate margins of this model. The use of the introduced models is compared with the results obtained through application of a recent optimal credible loss ratio IBNR reserving method.

This paper was prepared for the 1st International IAA Life Colloquium (June 10-13, 2007, Stockholm, Sweden).

For the space of all feasible risks with arbitrary mean and standard deviation and a fixed limit, the use of the rule of thumb "actuarial premium = mean + half of standard deviation" is justified. It is shown that this actuarial premium coincides with the maximum of the minimum risk adjusted premium obtained from a simple solvency model under the assumption that the supervising authority chooses the minimum level of "fair" actuarial premium and values the insolvency risk with the risk-neutral distortion risk measure. A case study using dynamic Monte Carlo simulation of the balance sheet of a portfolio of endowment life insurance shows that the introduced profit loading absorbs in average the random claims fluctuations.

In dialogue with Schweizer Bank, Mr. Jaek explains the types of risks covered by riskpro™ (in German).

Integrated risks in Islamic financial products.

This article examines what approach Islamic banks should have towards the Basel II accord.

Financial analysis has become the key element of strategic and operational risk management of financial institutions since the beginnings of the Basel II capital accord in 1988.

Dr Winter's understanding of financial analysis and the importance of the notion of unification as a prerequisite for the effective integration of all analysis activities.

Article published in Banque & Finance's special edition on Banking Solutions, September 2005

ALM - Asset and Liability Management - consists in managing the transfer risks of the balance sheet and guaranteeing the great equilibrium between medium and long terms. It should also recommend assets allocation.

Article only available in French

Translated from French from the article appeared in L'Agefi Services, August 30, 2004